Tag: Business Organizations

The English Common Law allows for three primary forms of business entities. The sole proprietorship, the general partnership, and the corporation are the three basic types of business entities (although there are many variations of each type). Each type of business has a very distinct set of advantages and disadvantages.

Respond to the Question Below

1) If you were a business owner today, which form of business would you prefer to own and why?

2) As an employee, which type of business would you prefer to work for and why? Please explain in detail with your specific reasons.

Ross and Westerfield graduated from UC in 2012 with a master’s degree in marketing and public health. They established
a healthcare business in 2013. The business sourced and distributed pharmaceutical products in the United States. Ross
and Westerfield have been partners for several years sharing profits and losses equally. Their partnership business has
been very successful, as they agree on most business-related issues. One disagreement, however, is about the legal form
of their business organization. Ross wants Westerfield to agree to changing the business from a partnership to a corporation.
Ross believes that there is no major problem with corporations and incorporating the business would attract investors to
help them raise large capital to expand the business internationally. Westerfield thinks otherwise and believes that the
business should remain a partnership to avoid any agency problems. Ross & Westerfield want you to help them address
the following questions:

1. What are the advantages and disadvantages of changing the business organization from a partnership to a corporation?
2. Ross and Westerfield know that limited partnerships, limited liability companies, and corporations enjoy limited liability,
   but they are not very sure what that means. Explain the concept of limited liability to Ross and Westerfield.
3. Assuming Ross and Westerfield have invested $5.0 million in the business. If the company happens to declare bankrupt
   and has $6 million in unpaid debts. Explain the nature of payments, if any, by Ross and Westerfield in each of the following
   situations:
   i. The company continues as a partnership
   ii. The company changes to a corporation
4. If Ross and Westerfield decides to go for a corporation they would like to consider alternative methods of issuing new
   securities (i.e., raising long-term funds) and the costs of issuing securities in the market.
   i. Distinguish between a public issue and a private issue of raising long-term funds and give two examples of each.
   ii. Identify five examples of flotation costs associated with issuing securities in financial markets that Ross and Westerfield
   must consider if they decide to go public.

Determine the type of organization you would like for your company (sole proprietor, partnership, corporation, etc.) and explain the advantages and disadvantages of your selection.

Writing, using software, and interpreting results is a large part of your learning experience. These assignments are designed to improve your use of technology and communication skills.