Management and Operations

Business Entities, Laws, and Regulations Paper

ETH/321 - ETHICAL AND LEGAL TOPICS IN BUSINESS

02/09/15

Richard Simon

Management & Operations

With most business, the formation of the agreement on how to manage and operate a business is just as important as the idea that created it and capital to start it. Managing the day to day operations when two people have to agree with each decision can hold up progress or worse end in the dissolvent of the entity before it has a chance to begin.

Duties

Agreement should outline in detail who is responsible for what and who has the final decision on the disagreements. Knowing the general partner’s strengths, and weakness can give some insight on how that is determined. The result is the same, both principles are invested and their decisions and actions will result in the profit and loss of this business. Since silent principles are limited in what they can do, the professional practice is the ideal method of running a business because they don’t have to share in the profits. Limited principles have a positive side though. They provide the capital to start your business with little or no interaction with the day to day operations of the company. Since the capital didn’t come from commercial lenders, you have more flexibility to manage your business without barriers placed by commercial banks. General partnerships like the professional practice, is preferred in most cases. This entity provides equal share in gains and losses. If the professional practice were to set up as a corporation, it would put a strain on the co-owners because a corporation needs to be set up differently when it comes to being partners. In the case of both the restaurant and the professional practice, the agreement should stipulate the percentage of profit and loss to each principle. Receiving equal shares or if one is running the day to day operation then they might receive more benefit than the other....