Business Formation of Potential Cardigan Home Store (Essay Sample)

Business Formation of Potential Cardigan Home Store
Name
Institution
Date
Date:To: P. Strami and Mable BaconFrom: [Your Name]Re: Business Formation of Potential Cardigan Home Store
Sole proprietorships are the types of business that are mainly started and operated by a single individual. They have various advantages including the fact that the sole proprietor is entitled to all the profit from the business alone. Since they are mainly small business, they are usually easy to start and they do not require a lot of capital as well. On the other hand, they may also have various short comings. In case the business incurs losses, the sole proprietor carries the whole loss by himself. It may also be much difficult to start the business in case the individual is unable to raise enough money require (Joseph, 2015).
Corporations are business enterprises that are formed and registered as legal and separate entities from their owners. There are various advantages that are involved with opening corporations. They are regarded separate to the owners and therefore they are not liable in case of any losses incurred in the corporations. Corporations also have the advantage of the stock market since they can possibly sell shares to the stock market to raise more money to run he corporations. On the other hand, they also have various disadvantages. Corporations are usually legal businesses and are therefore monitored by the government. This increases the paperwork required in the company to carry out any transaction. Corporations also take a very long period of time to form. Since they have to go through many government processing and legal process, they may take unnecessarily a long period of time to form. They also involve many entities in decision making; this makes the whole decision making process more complicated with delays in decision making (Lorette, 2015).
In most cases, partnerships are business entities that are formed by more than 2 people. However, it is usually recommended that the maximum number of partners in a partnership should be 20. Contrary to the other businesses, the partnerships have their advantages. Since it is a business that involves many people, the business has the advantage of increased capital. In partnerships, each partner has to contribute a particular amount to the business making the business to have more capital. It is also an easy business to start since it does not involve many legal processes. However, there are also disadvantages that may be associated with staring partnerships. There is a high possibility of frequent disagreements among the partners which may hinder the operations of the business. The partners are also fully liable to the debts of the partnership in a personal capacity (Stainback, 2000).
In my opinion, I would advise the cardigans to open partnership business. Despite the fact that it is cheaper and easier to start, it also holds each member of the family liable for the loss of the business. This would help to reduce any cases of disagreements regarding the progress of the business.
Homigans fine home furnishings is one of the names that have been selected by the cardigans to be used for the business. In my opinion, this is not the best name for an enterprise. The name of an enterprise mainly has to advertise the effectiveness of the business and the quality of the services offered. However, this name mainly portrays the type of family establishing the business and barely the type of services to be offered. Similarly, the name cardihome furnishing is biased with the sole intention of advertising the family rather than the main business.
A partnership deed is the most important document that would be required to form the partnership. This is because it is the document that hi9ghligjhts all the financial contributions of each partner to the business. This would help in cases where there is need to share the profits and debts liable to the business. A partnership agreement also states all the rules that are required to govern the business. This would help in order to avoid interference of the business by family issues and to ensure that each member of the family handles the business according to the rules set in the agreement (Carter, 2015).
Partnership agreements also help to outline the roles and responsibilities of each partner. . Since every...