Joe's Landscaping

Entity Selection Exercise

Charles Blackstone

Law 531

16 August 2010

Kathleen Butler

Joe’s Landscaping is dedicated to providing the highest quality professional landscaping and tree trimming services in area. Joe’s Landscaping will be perceived by the community, as being the friendliest and most knowledgeable premiere landscaping and tree trimming company in the DC Metro area.

Joe’s Landscaping is a successful small business that is suffering from a lack of capital, which is normal in many small companies. Joe had a great year generating revenues exceeding $500,000.00, and employing at least 50 workers, working six days a week, but still experienced financial problems caused by clients not paying as agreed. Now Joe has to decide what type of business entity is right for his company.

Joe’s landscaping has been operating as a sole proprietorship. Joe has been making all management decisions concerning the business, including those involving hiring and firing employees. Joe owns all of the business and has the right to receive all profit generated by business. These are all great advantages of being a sole proprietorship business. There are also many disadvantages of being a sole proprietorship business. Sole proprietorship businesses usually have limited access to capital. Sole proprietorship businesses serve on personal funds, and are legally responsible for business contracts and the torts of employees commit in the course of employment.

Problems with Joe’s Sole Proprietorship:

1. Subject to torts commit by employees in course of employment.

a. Joe employs over 50 workers, working six days a week during busy season. Landscaping is a business that requires you to work on people’s personal property which could be damaged due to negligence of employee which will perhaps lead to a tort against Joe’s business. Joe’s also vulnerable to torts raised by...