Opening a business is sometimes deemed as an easy task because the people that have the idea in mind always assume that capital is ultimate requirement. This notion has led to the downfall of many starting businesses because when disaster strikes most of the shareholders are not willing to pay for the damages or the losses incurred. Disaster refers to unfortunate events like fires, floods or client accidents. These are events that lead to huge losses and can sometimes make the businesses go bankrupt if not lose their operating licenses (VonderHaar, Griffin, Ferri, Bhuvanagiri, & Lillis, 2017) . Types of business entities that exist are; sole proprietorship, general partnership, limited partnership, limited liability partnership, limited liability limited partnership, corporation, non-profit corporation, Limited Liability Company, joint venture and tenants in common. Each type of entity has advantages and disadvantages over the other and it is vital for a business to know the exact kind of operations it will be undertaking before they register the business. It is important to note that the different kinds of businesses are restricted to certain types of insurances, taxes and certificate charges.
Sole proprietorship is owned by one person or a married couple, the owner or owners are the ones directly involved in the daily management of the business and are liable to the debts and the profits. General partnership is where two or more people contribute labor, finances, skill or knowledge to the business. Each partner equally shares the management, profits and debts of the business. Limited partnership is similar to general partnership whereby all the partners take part in the management and share the profits, but the debts are limited to the extent that each individual invested in the business (Nechaev & Antipina, 2015) . Limited liability is also similar to general partnership but the partners don’t cover for the debts and losses that arise from negligence of another partner. Limited liability limited partnership is similar to limited partnership but here a certificate is issued to shield certain partners from certain obligations. Corporation and non-profit corporation discharge the duty of management from the business owners and entrusts it to a board of managers. Only the profits are given back to the owners of the business. Limited Liability Company allows the partners to write down their terms of operation that are to be followed throughout the time that the business exists. Joint venture allows the business to operate only for a certain timeframe.
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There are two types of business entities that can suit Arcadia; general partnership and limited liability partnership. The two types of entities allow Jeb and Josh to invest in the business with any resources they have and still share the profits and losses. The distinction only emerges when losses occur. Jeb owns a different company and it would be unfair if he is asked to pay for the losses that occur at Arcadia when he is not present. Since Josh is the partner tasked with equipping and training the customers, it would be fair if each partner is liable for the losses that occur from his individual negligence (VonderHaar, Griffin, Ferri, Bhuvanagiri, & Lillis, 2017) . That is why I highly recommend limited liability partnership. General liability business entity dictates that Jeb and Josh be personally liable for the damages on Jane. Both of them will have to pay equal amounts of money as compensation to Jane. The dictates here don’t discriminate against the amount invested or the task that each member plays in the daily management of the business. Creditors from Jeb’s closed wind energy company have the right to seize Arcadia assets and profits as long as the part that they are taking or controlling is signed to Jeb. The situation would have been different if Jeb had let Josh register the business as a sole proprietorship entity but still invested in it secretly. This would not allow the creditors take control of assets and profits from Arcadia sports.
References
Nechaev, A., & Antipina, O. (2015). Analysis of the Impact of Taxation of Business Entities on the Innovative Development of the Country. International Journal of Economic Perspectives , 9 (3), 5
VonderHaar, G., Griffin, M. B., Ferri, A. N., Bhuvanagiri, V., & Lillis, D. (2017). U.S. Patent Application No. 15/247,100 . .
