Business Construction Scenario
Business entities vary from countries to countries since the formation of a business is controlled by the various legal systems instituted in those countries. There are many types of business entities, and this is where we find the likes of sole-proprietorship, partnership, cooperatives, corporations and limited liability Company among others (Waddell, 2008). A business may be categorized in any of these entities just by the composition of its members.
Business Scenario
From the business scenario, where Jose and Lou wants to open a sports bar and restaurant, but they don't have enough capital to start up the business; therefore, they need to partner with Miriam who will be able to finance them but will be playing minimal role in its management. This situation will lead them to forming a partnership type of business entity with her.
Through partnership, all their mutual interest will be covered; Jose and Lou will have the capital they need to start the business through Miriam contribution. While engaging into partnership, both parties are expected to formulate an agreement among them while will stipulate clearly how they are to run the business, the amount of profit each should get according to how much they contribute and their role in the business, their responsibilities into the business, how the achievement of the business is to be evaluated, and lastly, the agreement is to state clearly what is to take place in case the partners decides to dissolve the business. The agreement is normally prepared to suit the specific business it is meant for (Ostrowski, 2010).
In partnership entity, the partners share all the losses and the gains got from the business. Both partners will have control over the business, but Jose and Lou will be the ones running the businesses and they will be paid for their contribution of running the business apart from the profits or the losses they would have made (Waddell, 2008).
Since in this type of business entity, one of the shareholders who run the business is paid some stated sum of money, in addition to the profit distribution, and...
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