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Business Information
Macy Morehart
BUSI 561: Legal Issues in Business
Professor Stohman
August 4th, 2022
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Coffee shop businesses have been a huge success as coffee consumption is vital in most
of Americans lives. A coffee shop allows people to grab caffeine on the go stepping into a space
that allows for more experiences than just cherished beverages. In fact, caffeine is only a part of
the desire for coffee since “a mere 42.9% of its population consumes coffee because they enjoy
the taste” (Editorial Team, 2022). This begins to explain that coffee shops often host more than
the drinks they offer but hold space that allows for relationships to form and grow. Shania
Jackson is known to be a mature woman who is known as a Christian to those around her. She
has a desire to create a Christian coffee shop in Michigan with the help of those around her. She
has many friends showing interest in designing a space that can host the community and place to
go for coffee. As she is planning the details of her business, she is considering organizing it in
different manners, but has yet to discover the best one that suits her dream. She is deciding
between a sole proprietorship, a partnership of some sort, a small corporation or an LLC. Each of
these have importance in small businesses but they are specific to different desires. A sole
proprietorship is one you choose when you go into a business on your own. This means that it is
“a business organization in which you, as the sole proprietor, are in sole control of the
management and the profits and losses” (Education & Kippenhan, 2022). This means that this
type of business is ran by a single individual and can bring both advantages and disadvantages to
the table. Although it can seem easy as it requires few legal formalities, this would not be a great
fit for Shania as this will be ran by a multiple number of people rather than a single entity.
Another way to create a business is through a partnership. This is a business where two
identities are in charge of the responsibilities and ownership. There are different types of
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partnerships that one is allowed to have through a business. These partnerships are general
partnerships, Limited partnerships and limited liability partnerships. General partnerships are the
easiest partnerships in most cases. A general partnership typically “is formed immediately when
partners begin business activities. There is no official paperwork required. Only general partners
exist in a GP” (Corporate Finance Institute, 2020). These are easy as they can be taken apart and
broken up at any given moment. The second form of a partnership is the Limited Partnership.
These types of partnership provide more protected for the people involved. In this partnership,
“there is at least one general partner that manages operations and takes on unlimited liability. The
remaining partners are limited partners, who hold financial stakes in the business but are not
personally liable for the business” (Corporate Finance Institute, 2020). This gives more
responsibilities to the partner who is managing the company rather than the financial partner. The
last type of partnership is a Limited Liability Partnership, also known as an LLP and is similar to
an LLC. This is a specific type of extended General partnership. This relies heavy on the
protection of both partners if one makes a bad decision. Both partners have unlimited liabilities
whereas an LP, only one has to hold unlimited liability. Although having an extra set of hands to
plan a business sounds enticing when it comes to a partnership, this can get complicated for
Shania as she has the dream and desire to create a Christian coffee shop and if she follows
through with a partnership, she has the possibility of losing her vision and dream of it.
Another way she can bring up her business is through a small cooperation. Businesses
like Walmart, Wendy’s, or Adidas are well known large corporations. These corporations hold
shareholders that are funding the businesses. In fact, a corporation is known as “a legal entity
formed by issuing stock to investors, who are the owners of the corporation” (Education &
Kippenhan, 2022). Within these small corporations there is a set of people who are the directors
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and who guide the decisions of the business to further the name of it. These directors are picked
by the shareholders. In these types of businesses, they are capable of being sued since they have
more stake. This would not be a great option for Shania as she does not have more than one
person in her life that is financially interested in funding the coffee shop.
The last option for Shania is to gather her LLC, which stands for Limited Liability
Company. This would be the best option for her to go with as she is building up her business.
This allows for her to have protection over her personal assets and is the best tax option moving
forward. This helps her keep a secure grounding on her personal life outside of her business.
Since coffee shops are directly corelated to food and drinks, she and her husband have a higher
chance of using their liability protection. It is best for her as “it combines the tax advantages and
management flexibility of a partnership with the limited liability of a corporation; however, an
LLC is not a corporation” (Education & Kippenhan, 2022). This would be the best option for her
moving forward in growing her business and keeping herself safe.
Moving forward after attaining a LLC she needs to be seeking people who can help work
the business and keep it moving. She should take the capital of her husband to help kickstart the
business. As she gathers employees, she should take on her neighbor, although he is not a
Christian, over her sister. If her sister’s husband is not going to be on board, her sister’s schedule
and flexibility may be limited and unreliable. This also is a great opportunity for Shania to
minister and share the gospel to Carlos, her neighbor. In Matthew 28:19, it shares, “ Go therefore
and make disciples of all the nations, baptizing them in the name of the Father and the Son and
the Holy Spirit” (New International Version, 2017). This showcases the possibility and outlet of
her making disciples in her very own business she is in every day. It sets an example to use
everyday life as a way to serve those around you.
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References:
Corporate Finance Institute. (2020, July 1). Partnership.
https://corporatefinanceinstitute.com/resources/knowledge/strategy/partners
hip/
Editorial Team. (2022, July 28). Coffee Statistics 2022 (Stats And Facts).
EspressoCoffeeTime - No.1 Resource for Espresso Lovers.
https://espressocoffeetime.com/coffee-statistics/
Education, M. H., & Kippenhan, N. J. (2022). Biblical World View Edition of
Dynamic Business Law: The Essentials. McGraw Hill Education.
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