1 paragraph abstract (Need in 6 hours)
Running head: BUSINESS LAW 1
BUSINESS LAW 2
Business Law
Name
Institution Affiliation
Business Law
I want to start a business of selling mobile phones and other electronics. Today almost everyone is using the smart phone which implies that the market for the product is high.
There are three types of business organizations, namely the sole proprietorship, the partnership and the third type are the corporation. With the amount of money that I need worth $100,000, I would go for the sole proprietorship. This is because a sole proprietorship requires a little amount of capital to start compared to other types of businesses. The $100,000 cannot start a large business. Again, I want to run the business alone with just one single employee and not a partnership.
Advantages of sole proprietorship
One advantage of the sole proprietorship is that the owner is entitled to all the decisions. The owner decides where to locate the business, what to sell, who to hire and how many workers he wants to hire. The process of deciding sole proprietorship is quick. These are the advantages that I would like to enjoy as compared to other business organization such as a partnership. In partnership for example, for a decision to be made, there has to be a consultation among all the partners. This tends to delay the process of decision making.
The other advantage that would make me start a sole proprietorship type of business is the fact that I would be enjoying all the profits generated by the business alone (Scott S., 2013. This is contrary to the partnership and corporations. In partnership, for example, the profit is divided among the partners in the agreed ration. This implies that no single partner has the right to enjoy all the profits alone. The owner of a sole proprietorship can only share the profit at his will.
Despite the many advantages that I can enjoy while operating a sole proprietorship business, I understand that several drawbacks can be faced. The major disadvantage that I would face is being responsible for liabilities in case the business is sued. I as the owner carries all the liability unlike in a partnership where some of the partners have limited and unlimited liability. Also, incorporation, the liability in case of debt is shared among the shareholders. The burned of liability is there distributed in the other forms of business organization. I might be forced to sell my assets to settle the debts (Farlin, 2015). The other major drawback that I might face with is the termination of the business at the occurrence of death. There might be no other person who can take control of the business following my demise. Unlike incorporation where the death of one shareholder does not affect the operation of the corporation. Another major disadvantage of a sole proprietorship is the funding of the business. Like for example in our case, the business requires an extra $90,000. I have to raise the entire amount by myself. That is, in a sole proprietorship, the owner raises the entire amount required to fund the business alone unlike in partnership where the total amount can be shared between the partners. Also in corporations, the capital required can be raised through such means like selling of shares.
Sources of the extra $90,000
Borrowing from friends. One can borrow from friends and relatives. Wealthy friends and relatives might be of great help as the can contribute to getting the business started.
Another source of the capital is the angel investors (Farlin, 2015). While most of the banks may be reluctant in granting of loans for sole proprietors, investors who have a great passion for an investment supply the business with the required resources. For that to happen, the sole proprietor bust has a strong business plan that will convince the investors to supply the capital. I would also apply for small business Administration loans. Small business owners can access loan programmes through the SBA offers (Scott S., 2013). They offer loans at low-interest rates and have easy payment terms.
Question two
Claims that Sikma would have on Jesse
It is evident from the case study above that Jesse misused the corporate resources by awarding an ambiguous salary to his best friend, Barry. The shareholders have the claim of misuse of the resources as well as acting not to the interest of the Corporation but towards personal interest. It was not his rule for one-two decide who is to take the role of COO neither was he supposed to set salaries for Barry. Under the Minnesota Status Section 302A.225, it is required that officers act in the best interest of the corporation as well as act in good faith. This duty is meant to prevent officers from assuming actions and from engaging in self-dealing. For instance, the Minnesota Supreme Court ruled that officers cannot assume such rights to rightfully belong to the Corporation. Such misconduct by Jesse necessities compensatory repayment to the shareholders as well as an award of attorney fees and court costs.
Since Jesse actions of employing a COO and the fraud were intentional, the action can lead to the award of punitive damages that are known to exceed even the compensatory award. If the case proceeds to the court and the Judge may make the ruling instructed to weigh among other factors such as the gains of the misconduct to the defendant, the conduct and attitude of dependent upon the discovery of the misconduct and finally the extent of the defendant awareness to the awareness of the misconduct. Therefore, any officer of the corporation, secretary, And CEO bust put the interest of the corporation first. All, their activities must be aimed towards the common interest of the corporation.
Claims that Barry would have against ABC. Corporation.
References
Farlin K M., (2015) How to Raise Money as a Sole Proprietorship accessed from http://smallbusiness.chron.com/raise-money-sole-proprietorship-11185.html last accessed on 4 December 2017.
Scott S. (2013) Sources of Finance for a Sole Proprietor. http://smallbusiness.chron.com/sources-finance-sole-proprietor-4106.html S