Normally starting a business may seem to be confusing since choosing from various options is not always easy. Gloria, having the ideas present in mind and already having tried by formation of prototypes and widgets, one is confident to start. I believe that it would be sensible too if you choose a business formation from a sole proprietorship, a partnership or a private limited company. This will call for supervision by the owner with aid of other individuals. Bearing in mind that you and your husband are engineers, forming engineering or accounting company would be fit due to the fact that both of you have expertise in such fields. Concerning global expansion, through the interaction of different players such as customers and suppliers from both within or outside the country a link will be created (Colbert et al., 2011).
A sole proprietorship is where a simple business is set with full management and control of the owner. The owner runs and manages the business with little or no assistance of their family members. A partnership is a type of a business where two or more people agree to join hands and start a business with common agenda. They draw up an agreement between them on how to operate the partnership. Additionally, they also state terms of sharing both the profits and losses. A limited liability company is a formation where the owners usually known as members are protected from personal liability. It is where the protection of limited liability is ensured and bestowed upon the company.
Each business formation has its own merits and demerits which compare relatively to enable one consider which outweighs the other. For instance, a sole proprietor is advantageous in that: there is quick decision making since no many people are consulted, it is easy to start, manage and control, the business creates employment to the owner and immediate family members and there is high level of confidentiality and flexibility in that the owner can choose any kinds of goods and services to deal with. There is also flexibility in terms of working hours. However, a sole proprietorship has the following demerits: the owner is responsible for any losses or risks that the business experiences, one has to work for long hours with little or no assistance and rest for the success of the business and due to lack of collaterals, they may not get loans from banks and other financial institutions. The pros of a partnership are such as partners being able to raise more capital compared to an individual. For example, Mr. Gerald Wilson, Nancy, and Roger can chip in for the initial capital to start the business. Secondly, individual risks are minimized since profits and losses are shared amongst the partners. In addition, business can expand easily due to the more manpower and adequacy of capital resources.
On the other hand, a partnership has limitations such as over-dependence of some particular partners; liability of partners is not limited in that they are responsible for losses and risks of the business and finally limited performance lifespan due to factors like bankruptcy, withdrawal of partners or termination following death of a member. A private limited company is beneficial in that owners` liability is limited to the capital contributed, there is easy transfer of shares and also due to high potential of expansion, the business enjoys economies of scale. On the contrary, it is disadvantageous in that, its shares are not freely transferable to the public, conflict of interest is a barrier to effective management and unlike a sole proprietor, and decision making is slow and expensive (Gorski et al., 2013).
According To my research, the only business formation I find suitable for this family is a private limited company dealing with a manufacturing section of engineering nature and also an accounting section offering solutions no other businesses with accounting problems. This is because of the need to limit personal liability towards the family and develop towards a large sized business. The members can go to an extent of inviting investors from outside the country in order to develop links abroad. The fact that, a private company can be run by only one director justify your wish to resign from job and be the full-time director. Gerald is willing to give a loan as investment that in turn will have shares in the business and thus you should consider that capital and later pay back with interest. Another justification for this type of business is that Joe`s friends that are Nancy and Roger have enough capital to fund this business provided that it is profitable. Since Joe and his friends do not need daily commitment f towards the management of the business, this task can be bestowed upon only one individual (Mulroney& Lucy, 2013)
In addition, Joe can continue with his job as engineering as well as provide his support to the business. This will help keep a steady flow of income to your family and also provision of the necessary extra costs of the family such as insurance. Choosing a viable business formation to help you achieve your objective.
Colbert, Judy. Virginia off the Beaten Path: A Guide to Unique Places. Rowman & Littlefield, 2011.
Gorski, Paul C., and Seema G. Pothini. Case studies on diversity and social justice education. Routledge, 2013.
Mulroney, Lucy. Andy Warhol, Publisher. University of Rochester, 2013.
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