Shania’s partnership business
Question
Paper: Business Formation
Assignment Instructions
Shania Jackson is a mature Christian thinking of opening a Christian coffeehouse near Detroit, Michigan. Her husband, Marvin, is open to making a contribution of capital to the business, but he has no interest in participating in its day-to-day operations or management.
Shania’s sister, Kelsey, is a new Christian who has told Shania that she’s been looking for an excuse to get out of the house and would love to be a part of the business. Kelsey’s husband, a non-Christian, opposes his wife’s involvement and has told her that he wants her to remain a stay-at-home mom to their 2 children.
Shania’s neighbor, Carlos, is a non-Christian who has also expressed an interest in participating in the business as a way to earn extra income. Carlos thinks the “Christian thing” has potential with all the big churches in the area, including a Mormon temple and a large Kingdom Hall of Jehovah’s Witnesses.
Shania has considered organizing her business as a sole proprietorship, a partnership of some sort, a small corporation, or an LLC.
Advise Shania on the following decisions:
1. Which of the business entities under consideration best accomplishes her business goals? Thoroughly explain the reasons for your recommendations.
2. Which of the interested persons she should include in her business, in what role(s), and why? Your analysis must include Biblical perspectives, such as Biblical considerations of marriage, and business relationships with non-believers. Thoroughly explain the reasons for your recommendations.
Support your analysis with at least 3 scholarly sources other than the course materials, cited in-text and in a reference list. You must also integrate Biblical worldview analysis.
This paper must contain at least 800 words and follow current APA format but does not require an abstract. The title page, abstract (if you include one), and reference list do not count towards the length requirement. Submit your paper as a Word document.
Submit your paper by 11:59 p.m. (ET) on Sunday of Module/Week 7.
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Solution
Business Entity
Ideally, one can establish a business through a sole proprietorship, partnership, a small corporation, or a limited liability company. Every business entity has advantages and disadvantages, depending on the risk one is willing to take and the criteria used. Shania is looking to start a 'Christian coffee house.' The best entity to choose will be determined by the risk, availability of capital, and legal obligations. Shania's business location is strategically placed whereby it is surrounded by large churches, the temple, and the kingdom hall of Jehovah's witness. Shania's husband is interested in contributing capital to her business, and they can form an agreement based on the roles each should play. Therefore, based on these considerations, Shania should start a partnership, specifically a limited partnership, governed by the Partnerships act 1961 (Nazrin, 2017). A limited partnership has both general and limited partners, whereby the general partners are directly involved with the day-to-day operations and management of the business. In contrast, the limited partners are not involved with the day-to-day operations. General partners have greater responsibilities and liabilities in terms of business debt and obligations.
A general partner is considered the primary owner and is involved with the company's decision-making and legal and financial obligations. For example, Shania will be the general partner and responsible for the operations and management of the business. On the other hand, a limited partner is an investor who provides capital to the business in exchange for a shared interest in the business. For instance, Shania's husband is willing to contribute capital to the business without being involved in the management and operation activities. One of the main advantages that Shania will gain is the availability of adequate capital. A partnership operates with capital from the partners, and starting a business with a generous amount of capital automatically increases the business's scope. Furthermore, in a limited partnership, the tax is imposed on the partners' income (Gordon, 2021), which is an advantage since the business is not taxed, and the tax will depend on the individual's income. Business development and profit maximization is the primary purpose for every person looking to start a business.
In every business, there are disadvantages. A limited partnership is disadvantaged because the general partner bears the maximum risks in case of debts (Lloyd, 2016). The general partner is significantly disadvantaged as the entire responsibility falls on them if the business goes bankrupt. For instance, if the coffeehouse goes bankrupt, Shania will bear all the risks involved while the husband only bears the minimum risk imposed on the resources invested in the business. Furthermore, a limited partner is not involved in any decision made in the business, which may lead to inconsistencies in decision making, putting the entire partnership at risk. Forming a limited partnership also requires a tedious legal procedure that varies from state to state.
Nonetheless, a partnership is a very convenient form of business. When the involved partners have similar goals and the necessary legal procedures are taken, it can lead to a very successive business. A limited partnership will favor Shania and the husband as they will exercise the 'labor-capital' partnership where one partner contributes the capital while the other performs the actual work.
What interested person should Shania include in the business?
Businesses often require an extra person to reduce the workload and ensure smooth and reliable services. For example, Shania is forming a Christian coffeehouse. Some assistance is needed, such as serving the customers, operating the cash register, someone working on the customers' orders, and one who waits the tables. Shania's business is a limited partnership where she handles the actual work while the husband only contributes capital to the business. Shania could use extra help as it would be challenging to do all the services alone. Shania should give Carlos the role of taking and preparing the customer’s orders. Christians are called to maintain good relationships with the people they work and live with. In the bible (2 cor. 6:14), Paul writes, "be ye unequally yoked together with unbelievers: for what fellowship hath righteousness with unrighteousness? And what communion hath light and darkness?" According to this verse, any relationship that compromises a Christian's testimony to Christ's goodness and faithfulness should be avoided. This concept would apply in the context of marriage since, in marriage, a believer's beliefs can easily be influenced by their partner. Carlos is a non-believer, but his involvement in the business will not influence Shania's beliefs or any other believers as it is unlikely for co-workers to influence each other's beliefs. Furthermore, partnership businesses are contractual. Shania should indicate their involvement in the contract; if Carlos agrees to the terms, then their working relationship will be healthy and productive.
Kelsey, Shania's sister, is a new believer interested in joining the business. However, Kelsey's husband, a non-believer, is against the idea and wants Kelsey to keep her role as a housewife. Marriage is union by God, which means bringing two people together in a covenant. According to Paul's teachings, marriage between a non-believer and a believer is not right, as he says a believer should not be unequally yoked with unbelievers. However, the bible also says in (proverbs 18:22) "he who finds a wife finds what is good and receives God's favor." Therefore marriages are blessed by God and can be a blessing whereby the woman’s behavior and beliefs could attract the man into Christianity depending on how well she portrays herself. First peter (3:7), peter urges husbands’ urges to “dwell with their wives in understanding and give her honor." Additionally, husbands should keep open the lines of communication and support their wives. Therefore, Kelsey’s husband should let her participate in the business where she can take the role of a waiter. Waiting at the tables would be advantageous to Kelsey as she will be mingling with the other believers, and this could help strengthen her faith since she is a new Christian. Shania should then present a contract to Carlos and Kelsey on working in the coffeehouse.
References
1 Peter Chapter 3 KJV. (n.d.). OFFICIAL KING JAMES BIBLE ONLINE: AUTHORIZED KING JAMES VERSION (KJV). https://www.kingjamesbibleonline.org/1-Peter-Chapter-3/#7
2 Corinthians Chapter 6 KJV. (n.d.). OFFICIAL KING JAMES BIBLE ONLINE: AUTHORIZED KING JAMES VERSION (KJV). https://www.kingjamesbibleonline.org/2-Corinthians-Chapter-6/#14
Gordon, J. (2021, September 25). Limited partnership - Explained. The Business Professor, LLC. https://thebusinessprofessor.com/en_US/business-governance/limited-partnership-explained
Nazrin, N. (2017). Companies Act 2016 and its impact to Businesses in Malaysia. Int'l. In-House Counsel J., 11, 1.
Limited partnership. (2015, July 15). 1800company. https://1800company.com/incorporate/limited-partnership/
Lloyd, A. (2016, March 9). Pros and cons of a limited partnership. Medium. https://medium.com/@thecompanywizard/pros-and-cons-of-a-limited-partnership-1912911eadb4
Proverbs Chapter 18 KJV. (n.d.). OFFICIAL KING JAMES BIBLE ONLINE: AUTHORIZED KING JAMES VERSION (KJV). https://www.kingjamesbibleonline.org/Proverbs-Chapter-18/#22
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