question archive Shania, Marvin, Kelsey, and Carlos are interested in the venture of opening up a Christian coffee house in Denver, Colorado
Shania, Marvin, Kelsey, and Carlos are interested in the venture of opening up a Christian coffee house in Denver, Colorado
Subject:Operations ManagementPrice: Bought3
Shania, Marvin, Kelsey, and Carlos are interested in the venture of opening up a Christian coffee house in Denver, Colorado. Shania and her partners have agreed to name the business ‘The Neighborhood Coffee Shop’ after performing a corporate name search and found the name available as well as a trademark in Colorado. I suggested it would be unique and a name easily remembered by customers.
In suggesting a partnership business for the four friends, subsequently, would be vital that they work together in good faith of benefiting the business. It is not necessary to create a written agreement but suggestive to advised that they create an Article of Partnership. The respective state law will apply and dictate major partnership affairs. Most states have adopted a version of the Uniform Partnership Act (or Revised Uniform Partnership Act). A well-drafted partnership agreement not only outlines rights and obligations but also outlines how to settle conflicts that may arise from time to time. Additionally, partnership agreements address anticipated “change” such as succession, growth, retirement, and dissolution (Brim, 2021).
It would help distinguish the name of the business, the actual names of the owners who would be in partnership, the time frame of the partnership or whether it would be indefinite, how much each partner will be contributing to the business, how the profits and losses are to be divided, and the management duties of each partner would be written into the article. Each partner would be able to file individual taxes as personal income and deduct business losses.
However, they would altogether be liable for any debts and personal liability that occurred within the business. I would suggest this also because they would be able to divide the necessary funding for the business, loans, and any other liabilities together and not be a severe burden on just one person. The business could be dissolved if either of them became deceased at any time.
If Shania were interested in the prospect of sole proprietorship, the ease of formation is that she would then complete management and control over her business and determine how she wants her business ran. Also, the business would be taxed as personal income and she would not have to share profits with anyone else. Essentially, she would be personally funding the business with her own money and if she is in need of loans to help fund the business, that would be her own obligation which could be a disadvantage to her.
The concerns with being a sole proprietor is being liable for debts and losses that could occur if there were an injury at the business, she would then be compelled to the responsibility of liabilities, debts, and contracts that are tied into that business. I certainly would not suggest sole proprietorship even with the sparse legalities involvement and this is not feasible for her because she has the others to consider, and they are willing to be in partnership with her to share the responsibility of investing for profits.
S corporation for Shania and her friends could be suggested because of the limited number of partners for Shania and her friends. It is like a partnership and only formed under federal tax laws. The advantage of the S corporation for them would be that the income from an S corporation is simply passed onto the shareholders of the company instead of being taxed at the corporate level. They would pay taxes on the money at marginal tax rates. They can minimize self-employment taxes but are subject to self-employment taxes, but the owners sometimes may have to pay taxes on profits distributed and reinvested back into the company (Arthur, 2021).
As a general partner may invest money into the company but be personally liable for the debts and obligations of the company, responsible for the management of the affairs. It may be suggestive for Shania to be a limited partner for liability purposes, but still, be an investor in the business. This may also be agreeable for Marvin since he will be considered an uninvolved investor who contributes money to the partnership but doesn't want any say over management decisions.
Overall, after careful review of all the partnerships, I would suggest that Shania and her friends create an LLC (limited liability partnership). Unlike a general partner, who is responsible for the debts and liabilities of the company and personal assets are at risk, she will not have that concern. Yet, she will not have authority completely over the day-to-day operations, she will be limited to such. She and her partners will all have an active role in the day-to-day operations and management of the company and the overall raising of money for the business. She can have an unlimited number of members; it would protect each of them from any liabilities of the other’s professional misconduct in the business. Also, the key takeaway in an LLC is that it will shield the personal assets of the members from business creditors, and can only go after the business's assets, not the personal assets of the LLC members and they will report earnings on their personal tax returns (Business Daily News, 2021). Each of their personal assets would be protected and would not be considered for seizure. It is a small business managed solely by only 4 members which would be Shania, Kelsey, and Carlos, excluding Shania’s husband, Marvin, who chooses to be a silent partner with little or no involvement.
The LLC must have less than 100 partners and that she does have. She would then create the operating agreement, comply with tax and regulatory requirements by obtaining an EIN (employer identification number), obtain a business license, sales, and employer taxes in cases you have employees and are selling goods, you will need to register with appropriate taxing information. She will need to file annual reports dependent upon the state in which the business is being created (Fitzpatrick, 2021). Shania and her partners are in Denver, CO, and will need to file annual reports (Colorado LLC Annual Report, 2021).
From a Christian worldview of the partners who are not Christians would not deteriorate the purposes of making a profit as long as it is a legal business, conducted with ethics, and uphold the morality of humans mankind. As long the business is run with integrity and respect each and every person with kindness and human decency. Overhearing what they said, Jesus told them, “Don't be afraid; just believe” (Mark 5:36 NIV). I personally believe that in doing business with people don’t abandon their beliefs because there is a disagreement in a business matter. There will be many times when you are the only one who believes.
Paul wrote, “Do not be yoked together with unbelievers. For what do righteousness and wickedness have in common? Or what fellowship can light have with darkness?” The underlying principle here is that whenever a relationship, be it personal or business, is such that a believer’s testimony to Christ’s goodness and faithfulness could be harmed, damaged, or compromised, then that relationship should be avoided (2 Corinthians 6:14). There will those who may feel this. I feel we must be firm believers in the doctrine and move forward. We just might be the ones who changed their mindset by the way we conduct ourselves and our business.
