Business structure options for X-Flies fence repair company

Legal or ethical?

Options for Type of Business

Legal or ethical Responsibility for Trisha's Fence Repairs

Options for Type of Business

Given the situation that has been explained in case, there are two options before X-Flies. There are options of going for a sole proprietorship form of business or enter into a partnership form of business.

As is evident from the case, there is not enough money -- about half of the amount estimated for a year, with the proprietor to start the business. Therefore, it is obvious that some form of capital has to be arranged from somewhere. This can either be in the form of a loan or from equity that would come along when the ownership is shared s in partnerships.

Given the fact that there is not enough capital and the business would require borrowed capital from somewhere, it is evident the sole proprietorship or single owning is not the right option for the business right now. The rights, ownership and control of the business have to be compromised to a certain degree right now to be able to begin the business. However, there are a number of options that can be used to reduce the sharing and handing over of partial control of the new company to someone who provides of additional capital either as a loan or as equity infusion.

Partnerships are more like proprietorships where the law sees a single entity -- the business and does not distinguish between the owners of the business. the partners always bound by a legal agreement that details how decisions would be made, sharing of profits, resolving of disputes, addition or deletion of partners, etc. among other things.

X-Flies has the option to go in for a general partnership with the person who agrees to take up equity in the business and would have an equal control over the business. The other option is to get into a Limited Partnership with limited liability where the liability of the company and the other partners is limited to the extent of their investment and immune from any additional liability of the other partner/s. partners in this form also have limited input related to management decision and is suited for short-term projects and investments in capital assets. Another option is to opt for a joint venture where the partnership would be for a limited period of time (Gibbs & Humphries, 2009).

In the context of the case, X-Flies is best suited to go for a joint venture for a limited period of time where the partner only infuses capital and goes away with parts of the profit as agreed upon and exists the business after a prefixed period of time. While this form of partnership would have to share control for a certain period, the owner of X-Flies can get back complete control after the completion of the period of the agreement. This way the business can get capital and there would not be a need for a continuous sharing of control and ownership.

Legal or ethical Responsibility for Trisha's Fence Repairs

Legally the owner of the X-Flies company is not responsible for Trish's fence repairs. This is so because Fonzie do does not have any legal ownership of the business nor is the business responsible for any of the personal liabilities that Fonzie might incur during the period of association. Fonzie has been hired to do a job and the association of the company with Fonzie is limited to paying the agreed fee to Fonzie. The business or its owner is not legally responsible for any personal liability that Fonzie has or would acquire during the period of association with the business as a hired hand. Hence, the owner of X-Flies has no legal responsibility to pay for the damages incurred by Trisha due to a carelessness or fault of Fonzie.