Case Study A:
What concerns would you have about operating this business as a sole proprietorship if you were Stan? What alternative form of business organization would you recommend and why?
In this case Stan is thinking about starting a toxic waste disposal business. He is considering operating this business as a sole proprietorship. Although this is a valid business organization it also carries numerous disadvantages, if not all aspects of the company are taken into account. I will explain some possible conflicts Stan can encounter as a sole proprietorship, and I will recommend an alternative form of business organization that may become more beneficial. After taking into consideration the two different operations I will come to a
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All risks and responsibilities are minimized on Stan while using a corporation business organization. Third party financial institutes may be more willing to provide loans of greater value to a corporation since there are minimized risks. Disadvantages towards a corporation is that he can’t run the business side alone. These may include electing a board of directors that have influence on the production of the company as well as shareholders in this corporation. Although this business organization provides tempting benefits there comes with complications, it’s just a matter of deciding which one organization will be the most beneficial for the company. For Stan to run his toxic waste disposal system there are many business organizations to choose from, however I believe that choosing to run as a corporation is more suited to his development. Through a corporation organization, Stan has limited reliability towards the company’s responsibilities and actions. If he choose to form the business as a sole proprietor he has unlimited liability and can be held accountable for any incident that may occur possibly losing all personal assets. Forming a corporation will become more reliable financially being approved for the actual plan and given a larger loan. This organization also has possible shareholders that can invest in the company. With sole proprietor the bank has leverage over