Pizza Sweet Company Limited: Business Plan and Legal Structure

This project presents a business plan for a pizza company, named Pizza Sweet Company Limited, structured as a limited liability company (LLC). The plan outlines the legal structure, chosen to avoid double taxation, provide flexibility, and protect the owners' assets. It details the responsibilities of the members, emphasizing the importance of formalizing agreements with proper documentation to avoid misunderstandings and ensure legal protection. The project covers contractual relationships with suppliers, emphasizing win-win situations and clear statements of duties, timelines, and deliverables. It also addresses licensing requirements and liabilities, highlighting the need for legal documents and the limitations of the LLC's liability protection, while also acknowledging the potential for personal asset liability in cases of negligence. The project references relevant sources to support the business plan's strategies and legal considerations.

STARTING A NEW BUSINESS
By (Name)
Course
Instructor
University
State
Date
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The business that I am intending to put up is a Pizza Company. Being that I did not have
enough capital for the business, I decided to talk to two of my friends to join me so that we may
work as partners. We agreed that two of us shall run the business as the directors and the third
shall just be a member. It is because he lacks the managerial skills. The money contributed by
each one of us shall reflect our shares in the company. We agreed that the name of our company
shall be PIZZA SWEET COMPANY LIMITED. This company shall be making pizzas and
selling to our targeted market which shall be the colleges and the locals who are around to where
we intend to set up our industry.
Proposed Legal Structure
Everyone who starts a business with others have to select a legal structure. Selecting legal
structures means choosing one of the customary formats that include: corporation, partnership,
limited liability company (LLC), or a nonprofit company. My proposal was that the company
employs a limited liability structure. My reasons for choosing this structure are that: First, it
helps the business to avoid double taxation and to support many classes of stock if desirable.
Double taxation typically happens when an entrepreneur chooses a C-Corp business structure,
which mage the company and its owner to be taxed separately (Business.gov.au., 2017). A
limited liability company is taxed just like in sole proprietorship; hence, prevents double taxation
to occur.
Second reason for choosing LLC structure is that making changes is easy. It is simple to
add a new partner and to sell entity to another person. It is more flexible than the C-Corp
business arrangement where minutes are needed when making board decisions (Meermann,
2016). In general, it has less restrictions as the management of a business is concerned compared
to other business structures. Third reason is that LLC structure allows members to protect their
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private assets against the law cases aimed at the company. In sole proprietorship the owner is
solely liable for all the liabilities while in partnership, the liability is shared. After few years the
founders can decide to replace LLC with S-Cop or C-Corp for it to be able to be merged with
another business (Meermann, 2016).
Lastly, it is easy to register a limited liability company. An LLC is perfect for business
beginners because it easy to register without the need of having attorney. Once the LLC has been
registered by the state, it is easier to obtain the Employer Identification Number (EIN) from the
Internal Revenue Service that enables one to obtain business bank accounts and checks
(Meermann, 2016 p. 5).
Responsibility of the Members
Sometimes friends are attempted to seal deals with word of mouth or by a handshake. It
is because friends see that formalities slow things down. However, to avoid any
misunderstanding we decided to formalize our contract using proper documentation that we
believed would give us and our business strong legal protection. Because we are all the
managers, we owed each one duties of trust. Therefore, the three relations we have involves:
 Contractual relationship with the supplier
 A win-win situation for the parties involved
 Relationship focused on performance during the implementation, but not the business
outcome
The most successful businesses consolidate the risk processes that involved the supplier and the
client sharing the management and identification of all the business risks (Business.gov.au.
2017). Events related to controlling risk may become the sole responsibility of any party;
however, both the parties should have the knowledge of the risks and the way they are managed.
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Other than that, a contract should be based on a win-win situation for both the parties. There
should be a clear statement of the duties on every party for responsibilities, timelines,
deliverables, and risk and project management that shall cover each stage of the project. Also, a
payment arrangement that connects payment of the project to complete the specified deliverables
should be in place. Additionally, there should be a payment schedule including an amount that
should be reserved until when the warranty will come to an end (Smallbusiness.wa.gov.au.,
2017). If there will be a large contract, it will have to be subdivided into different phases. Such
divisions will provide no commitment to move to the next stage with no approval from the
steering committee. It will be vital that the A senior executive officer approve all contracts with
vendors prior to signing.
Moreover, the strategy for the kind of the relationship with the vendor is based on
performance during the implementation, but not on the outcome of the business. Partnership
agreements are created where risk is jointly handled (Smallbusiness.wa.gov.au., 2017). Gaps of
the exception are removed during the contract negotiations. The consequences of any non-
performing party are clearly defined in the contract.
Licensing requirement and Liabilities
All the business must have the legal abiding document from the state. Any business that
shall start running without a license shall be prepared to face the law if found by the local
government. Other than license, LLC has a limited liability. Therefore, in case the company is
sued, the debtor can go for the company’s assets but not the personal assets of the owners, which
include their homes and cars (Manns & Todd, 2016 p. 730). Conversely, the personal assets of
the owner are not always protected in the LLC. For instance, if the owner commits negligence,
his own assets may be taken if the company gets sued.
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Additionally, being that a limited liability company does not have its own national tax
classification, and because each state has got its own ways of treating LLC tax law could be
confusing. The LLC must file its own tax returns just like in other businesses structures
(Business.gov.au., 2017). The business must also fill out an added paperwork and can face
additional tax rules that may affect the operating loss.
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References
Business.gov.au. (2017). Legal essentials for business. [online] Available at:
https://www.business.gov.au/info/plan-and-start/start-your-business/legal-essentials-for-business
[Accessed 1 Sep. 2017].
Business.gov.au. (2017). Understanding contracts. [online] Available at:
https://www.business.gov.au/Info/Plan-and-Start/Start-your-business/Independent-contractors/
Understanding-contracts [Accessed 1 Sep. 2017].
Manns JR., F, & Todd, T. (2016), 'Issues Arising Upon The Death Of The Sole Member Of A
Single-Member LLC', Marquette Law Review, 99, 3, pp. 725-762.
Meermann, E. (2016), 'Choosing the best business structure for a startup', Westchester County
Business Journal, 52, 16, p. 5, Regional Business News, EBSCOhost, viewed 1 September 2017.
Smallbusiness.wa.gov.au. (2017). Contracts and agreements | Small Business. [online] Available
at: https://www.smallbusiness.wa.gov.au/business-advice/legal-essentials/contracts-and-
agreements [Accessed 1 Sep. 2017].
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