SNHU BUS 206 Final Project: Business Structures Case Study

This case study analyzes three primary business structures: sole proprietorships, partnerships, and corporations. It explores the advantages and disadvantages of each, including liability, taxation, and ease of setup. The case study specifically recommends a Limited Liability Partnership (LLP) for a given scenario to protect personal assets from business debts and lawsuits. The analysis also covers the concept of personal jurisdiction, minimum contact, and how it applies in a scenario involving an internet company, a manufacturer, and a consumer who suffered damages from a faulty product. The case study also discusses the importance of contracts, FDA approval, and potential liabilities for different parties involved in the business operations.

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Case Study 3
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2/24/2020

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Case Study 3
Mainly three kind of business structure are there where first is sole Proprietorship. As the name
implies, this is a business structure, which is owned and managed by a sole person, and the business does
not have a separate identity from the owner (Kubasek, 2012, ch. 35, p 771). This structure offers several
advantages, for instance, the same is easy to set up and also needs very little cost. A very few rules and
regulations apply to the Sole Proprietorship business hence they do not need to get many license or
certificate to carry their business. The owner of the business receives direct revenue from the sale of
services or products and can keep this money or can reinvest in the future. In addition to this, the business
does not have to pay any tax on income but the owner of the business pays income tax on the revenue
account. However, some cons of these business structures are also there where the owner has personal
liability for all the debts of the business. As stated above, there is no difference between the business and
the owner under this structure hence the creditors of the business can ask their claim out of the personal
property of the owner.
The second type of business structure is a partnership firm. Two or more people remain involved
in this type of business structure where they are liable for obligations and entitled to rights in an
equal manner (Kubasek, 2012, ch. 35, p 772). Similar to sole Proprietorship business, a partnership firm
also does not pay tax on business revenue but partners pay income tax on their profit share. Partners of a
limited liability company (LLC) are liable for the responsibility of another person. There is also another
entity namely limited liability partnership (LLP) that is different from LLC in s situation where some of the
partners have limited liability (Kubasek, 2012, ch. 35, p. 774). LLP as well as LLC have features of
corporations and partnerships. To discuss the benefits of the partnership firms, this is to state that the same
is easy to establish and has the ability to raise more funds due to the involvement of more than one business
owner. A partnership firm gets the benefit of complimentary talent of more than one person. To discuss the
disadvantage of business to say that death or retirement of any partner leads dissolution of the firm which is
an uncertain act. Further, there are high chances of disputes when partners do not agree with each other.
Lastly, partners are personally liable for the debts of their business as well as for the actions of other
partners (Kubasek, 2012, ch. 35, p. 774). .
The third type of business structure is a corporation that also considers the most formal structure. Under
this structure, the business has a different identity from its owners (Kubasek, 2012, ch. 35, p. 775). . A

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company, being a distinct legal personality can purchase assets in its name as well as can develop the
contract. The main advantage of this business form is that the same protect the personal property of
business owners as the same cannot be used to pay the business's liabilities. Nevertheless, the other side of
the coin is also required to be understood here that reflects the disadvantage of this type of business
structure. Firstly, the formation of a corporate structure involved much cost and formality. It has many
legal formalities to do and has to comply with different federal as well as state legislations. Further, the
corporation business structure is subject to double taxation.
To conclude the discussion over the different business structures and to provide a piece of advice in the
given situation, this is to state that they should make a “Limited liability partnership” (Kubasek, 2012, ch.
35, p. 774). By doing so they will only be liable to assets of the partnership business. The personal creditor
of Jeb's farm is likely to satisfy their claim out of his money but would not be able to do the same due to the
LLP structure. Further, if Jane would sue for damages and medical cost then also Jeb's liability would be
limited to the partnership’s assets. Nevertheless, as Josh is in charge of excursions, personal liability would
be there for him (SNHU, 2016).