Uopx Law 531 Week 2

Legal Forms of Business

Christopher Knecht

LAW/531

October 2, 2011

Mike Kelley

Sole Proprietorship

Alvin has worked in a pet store for about 10 years. Alvin has been saving every penny that he can and has acquired about $20,000. Alvin has spent some valuable time in the pet store and has learned all the inner workings, and has decided that he wants to open his own pet store. For Alvin a sole proprietorship is the best option, because Alvin has limited assets the sole proprietorship would be the most economical for him. With the sole proprietorship Alvin would need to obtain a business licenses, space and product. Alvin would be able to make all management decisions, and this would help Alvin to reap the benefits that he has learned from his prior work as well as any profits. The first few years may be tough opening a new business, but under a sole proprietorship, Alvin would be able to claim all profits and losses on his personal taxes.

Partnership

Alvin and Simon want to open a pet store. Alvin tried once to open pet shop, but ultimately found that his $20,000 investment was not enough to start his dream. The bank that he sought a loan from needed more working capital to make such an investment with Alvin. Alvin did not give up though. Alvin decided to enlist the help of his brother Simon to get his dream off the ground. Simon was an accountant for a home improvement store in town, and Alvin figured that Simon’s knowledge would be a good asset to the pet store, not to mention that Simon had $20,000 to invest in the business as well. Alvin and Simon banded together and Alvin’s pet shop became Alvin and Simon’s Pet Shop. Alvin and Simon opened their pet store; all they needed was a business license, space, and pets to sell. The pair shared in profits and enjoyed the benefit of the business on their taxes.

Limited Liability Partnership

Alvin and Simon want to open a pet store. The problem is that the pair does not have enough capital to...