Hypothetical Business &
Forms of Business Organization
Week Two Assignment:
BUS/210 - FOUNDATIONS OF BUSINESS
University Of Phoenix
Hypothetical Business & Forms of Business Organization
The business I choose will be a restaurant for the purpose of the examples as we all have experience with them on a regular basis.
The Joint-stock company,
In this model we need to raise money to open or run our restaurant we want to make up for the funds we are short in. In exchange for some of the profits we sell a small portion of the company in the form of stock certificates, that make the stock owners liable for the business in exchange for a portion of the profits of the company. The issue with this is the risk for investors as even they may be liable if the restaurant should suddenly tank. Things like bills,and lost wages can all come out of the investors pockets if the business should fail. The risk is high due to the investors liability.
The Limited Liability Company or LLC
LLC's work like joint-stocks in that they share profits in exchange for upfront investments. However In the event of LLC's If the restaurant goes bankrupt the creditors in this instance cannot seek restitution from the stock holders. In that the risks are less finding investors may be easier as well as faster for the restaurants operational needs,staff ,and management.
Is a split ownership of the restaurant This has the same draw backs as the joint-stock operation as a co-owner will be liable to creditors should the business fail. However as a Co-owner a person would have a say in the businesses,like operational standards such as employees and management. As well a Co-Owner would expect a larger share of the profits then a stock holder in exchange for the aid in investments and the risk involved.
Sole Proprietorship mean I and I alone commit to raising the money in any way...
References: Jones. (2007). Jones: Introduction To Business: How Companies Create Value for People.
Retrieved from The University of Phoenix eBook Collection database.
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