I need help on the last two questions. Peter and Andrew are brothers. Since chil

Question

I need help on the last two questions.

Peter and Andrew are brothers. Since childhood, they have wanted to convert a barn on their grandfather's farm into a hunting and fishing lodge that would provide modest but comfortable accommodations for sportspersons using nearby recreational lands. Andrew has suggested that they bring his friend, Paul, into the business, as well. While Peter and Andrew would develop the property. Paul has experience in the hospitality industry and could manage the day-to-day operations. Peter and Andrew would also want to make the lodge available to local church groups for worship retreats. They haven't yet discussed this with Paul, because they know he is not comfortable with most churches and their positions on social issues. The men are now discussing how to form the new business, and have narrowed their choices to a general partnership or a limited liability company (LLC). What would you advise, and why? Consider and discuss issues such as: What personal liability will the owners have for the obligations of the business (contracts, debts, lawsuit judgments, etc.) Should Paul be included as a co-owner, or in some other role? On what do you base that decision? How would contributions to the new business be valued? How would profits and losses be distributed?

Explanation / Answer

Answer:-

With all this being said, I would advise Peter and Andrew to enter into a general partnership together, without including Paul as a co-owner. In 2 Corinthians 6:14, we are warned of the consequences of associating with nonbelievers, “for what do righteousness and wickedness have in common? Or what fellowship can light have with darkness?” (NIV). While I believe that as Christ followers, we have a bigger obligation to share the gospel with those that do not know Christ, as opposed to only seeking fellowship with other believers. Simply by having fellowship with a nonbeliever, we are able to shine God’s light to someone who does not know Him. However, agreeing with what Paul the Apostle wrote in 2 Corinthians, I do not believe that Peter and Andrew should enter into a business agreement with an individual who does not base his moral beliefs off of the same standards as the two brothers.

Answer:- If this was my own personal situation, I would offer Paul a management position, that allows him to oversee the running, upkeeping, and operations of the business. I don’t believe Paul has any real standing in being a co-owner, as it is not his family, nor does he have any personal/emotional investment into this business. However, I’m sure he is a trustworthy friend that would do a fine job of managing this business. I believe in allowing him a high, authoritative position will be very pleasing to Paul, while minimizing the risks that he would bring as a co-owner.

Answer:- If the brothers were to enter the general partnership, just as the two of them, they would need to have an agreement on how the profits and losses would be split. I believe the safest bet, although they are brothers, should go about this with legal commitment. Every decision needs to be put in writing in order to protect both brothers in the case of dispute. In their situation, I believe the profits and losses should be split 50-50. This requires them to come to a mutual agreement and to have equal entitlement in the business.

Answer:- While a general partnership allows for more personal risk, I believe it would be a better agreement for Peter and Andrew. By the brothers entering a general partnership, without the co-ownership of Paul, they are able to have the most freedom in conducting the business the way they see most fitting with minimal risk of dispute and dissolution. However, including Paul in the management of the business allows for his knowledge and skills to be used in a beneficial way to the business.

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