Business Organization CheckPoint

February 27, 2014

Business Organization CheckPoint
Valeria Wallace opens her own restaurant called Valeria’s Cuisine. To raise the $150,000 in capital she needs, Valeria chooses to form a joint-stock company in which she sells stock to Tom Parker, Bill Carpenter, and Susan Moore. Each investor contributes $50,000 and will share 60% of this venture with Valeria retaining 40%. Since this is a joint-stock company, all will be personally liable if the business fails (University of Phoenix, 2007). This means that Valeria, Tom, Bill, and Susan could be sued by the creditors for outstanding invoices (University of Phoenix, 2007).
Timothy Pearson wants to open a car wash called Sparkle Car Wash. He needs $50,000 in capital in order to start and chooses a limited liability company in which he sells stock to Jim Burton and Jane Ashmore. Each of these investors contributes $25,000 and will share 70% of this venture with Timothy retaining 30%. If Timothy’s business fails, Jim and Jane will only lose their investment of $25,000 since this is a limited liability company (University of Phoenix, 2007).
Karen Willingham and Justin Duncan, both lawyers, decide to form a partnership. Karen has been practicing law for 25 years and contributes $75,000. Justin has only been practicing for 10 years and contributes $35,000. They agree that the profits will be split 60% and 40% respectively. As their law firm grows, they add another partner, Joe Sutton. Joe has been practicing for 5 years and contributes $10,000. With another partner, they agree that the profits will be split 55%, 35%, and 10% respectively.
John Reed opens a pet store called John’s Little Furry Friends as a sole proprietorship. Since this is a sole proprietorship, John raises all the capital, makes all the decisions, and assumes all the risks (University of Phoenix, 2007).
University of Phoenix. (2007). Jones: Introduction to business: How companies create value for
people. Retrieved from University of Phoenix, BUS 210 - Foundations of Business