Business Entities: Memo to Gloria Smithson
LAWS 310
Professor

TO: Gloria Smithson, Business Owner
FROM:
DATE: May 24, 2015
SUBJECT: Business Entities

In today’s world, putting up one’s own business is better than becoming an employee considering that people can come up with various business ventures and ideas. However, not everyone who puts up their own business succeed primarily because of failure in identifying the correct business structure for their endeavor. To get the most out of a small business venture, it is crucial to choose the perfect structure that fits the type of business in order to maximize the potentials of the business, including maximizing financial and operational success. Therefore, identifying the appropriate business entity is necessary to guarantee the success of a business venture. Rules may vary depending on country, state, or province.
The Scenario
The husband and wife team of Joe and Gloria Smithson have come up with a new and more efficient widget that could help transform the energy industry from what it is today. Finding the confidence that they have already perfected the design, the husband and wife team created a prototype and designated a lawyer to file for design and utility patent applications. The next step therefore is registering the company and identifying the business entity type that would insulate her and her family from personal liability for debts of the business, or liability in the event of injury caused by the widget.
Other important information for consideration is the presence of additional potential investors, including Gerald Wilson and Nancy and Roger Forrester. The former is Gloria’s father, who is willing to inject seed money into the business but wants to have a certain level of control over the business and wants his investment be considered as a loan that the business will pay back