Scenario 1 – Business Organizations Bailey Andrews and Danita Brown met while wo

Question

Scenario 1 – Business Organizations

Bailey Andrews and Danita Brown met while working at Starbucks and attending college in Georgia. Bailey studied business at South University, while Dania attended the Art Institute for culinary management. The two friends were tired of working for someone else and opened [SELECT A NAME FOR THE COFFEE SHOP] as a partnership after college. Now that the business has grown, the two partners are considering a new legal form for their business.

Analyze three types of business organizations Andrews and Brown might consider for their existing restaurant. Be sure to consider at least one limited liability option. Explain the advantages and disadvantages of each type.

Select one type of business for Andrews and Brown and provide support for your choice.

Select a name for the coffee shop and use it when answering the remaining scenarios.

Explanation / Answer

BEANS

Let us look at the three types of business organisations :

Sole Proprietorship:

Business with one owner who operates the business. Simplest and most common form of business organisation.

Advantages:

Disadvantages:

Partnership:

This is the type with 2 or more business partners and they share unlimited liabilities of the business. They can operate business together. The three types of partnership are :

Advantages:

Disadvantages:

Corporation:

This is also a limited liability option. The business is owned by multiple shareholders. A board of directors is appointed to oversee the business operations.

Advantages:

Disadvantages:

Hence, after understand the various types, we see that Andrews and Brown can not opt for a sole propreitorship for their Coffe Shop called BEANS. Also, they are not large enough to become a corporation yet.

So the best choice for them is to start off as Partnership where both of them have equal control over the business. This will make decision making smooth as well since only two of them are involved. Andrews can take care of the business aspect and Brown is the expert in the culinary department. And they can switch to limited liability partnership if and when they require to do so. Also, they would not be subject to any corporate taxes.

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