BUS 210 OweOWeek 6.edited

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1 Business Law Shivam Mehndiratta Southern States University BUS210: Week 6 Writing Assignment Instructor: Tannia M. Schmidt Date: 10.11.23

2 Business Law Prompt: Owen Plans to Open Owen’s Pets Store, A Pet Sales and Pet Supplies Outlet, and to Hire Quimby and Ruth. Owen Will Invest Only His Own Money. He Does Not Expect to Make Any Profit For At Least Two Years And to Make Almost No Profit For the First Three Years, But He Hopes to Expand Eventually. Which Form of Business Organization Would be Most Appropriate? What are the Chief Characteristics, Advantages, and Disadvantages of this Form of Business Organization? If Owen Wants to Obtain Additional Capital to Expand the Business But Does Not Want to Lose Control of the Firm, What is His Best Option? Owen can opt for a sole proprietorship business organization to open the pet store as per the planning. The main reason for stating this is this form of business is simple as the owner Owen is interested in self-investment when it comes to business initiation. As the main characteristic of a sole proprietorship business is the owner is the prime controller of business income including carrying out the responsibility of all debts, Owen would take the benefits of conducting the business without involving the other employees in the decision-making (Miller & Hollowell, 2019). The case study also points out that Owen, in the beginning, wanted to invest only self money, the principle of sole proprietorship organization would be fitted in this regard as this type of organization can be inaugurated easily with low set-up cost (Chowdhury, 2013). Some advantages that Owen can obtain from a sole proprietorship business organization are receiving all profits, being taxed once, and being less costly for the startup. However, Owen can also experience some disadvantages including Owen's need to bear all the liabilities, limited benefits, or the opportunities for raising capital and dissolving the business upon death.

3 In the future, if Owen wants to obtain some additional capital for expanding the business without losing control of the organization, Owen can select a limited partnership or LP as it helps to bring the investors for expansion. In that case, the business comprises one or more general partners along with one or more limited partners (Miller & Hollowell, 2019). The Limited partners can be the investors of Owen's Pet Store and they will refrain from being involved in the management of the business. In return, they will only be liable for the contributed amount. Owen can take the benefits of investors for expanding the business while not losing control of the organization. Nevertheless, the entrepreneur of the business (here is Owen) can be protected from personal liability after creating a limited partnership organization. According to the rules and regulations about limited partnerships in the state of California, the business will not require any estimated tax requirements but the partners might be cautious about making their tax payments. The law has also described that business that runs in a limited partnership are subjected to pay an annual tax of approximately 800 dollars (Franchise Tax Board, 2021). However, it will not be problematic for Owen and the company because the business can get the opportunity to generate more revenue due to investors and business expansion. The limited partnership agreement can put any terms into the business according to the discussion and agreement of all the associated parties. Owen and the company also need to be careful while setting up the limited partnership organization because the interest can be considered as a security. In that case, the business can face problems as it provides services and advertising in front of the public. Overall, this business can be ideal for Owen when it comes to attracting investors for the capital as the owner can qualify for a set of investors who can help to do the business in a superior way.

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4 References Chowdhury, A. A. (2013). Proprietorship Firms: Advantages and Survival. SSRN Electronic Journal . https://doi.org/10.2139/ssrn.2220979 Franchise Tax Board. (2021). Limited liability limited partnership | FTB.ca.gov . Ca.gov. https://www.ftb.ca.gov/file/business/types/limited-liability-company/limited-liability- limited-partnership.html Miller, R. L., & Hollowell, W. E. (2019). Business law: text & exercises (7th ed.). Cengage.

BUS 210 OweOWeek 6.edited

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