LEGAL, SOCIAL, AND ECONOMICAL ENVIRONMENT OF BUSINESS
In the scenario I am an inventor of a product that has combined other products that are dangerous to use but very helpful. With this invention I see that in the future there will be many different ways to use my product in a safe manor just like the TV remote control. I have little skill in the business aspect of things and very little money to start off with. I am trying to figure out what type of business structure (Sole Proprietorship, Partnership, or Corporation) would best suit my needs and help my family out in the long run.
To begin, sole proprietorship is a type of business that is the easiest to set-up, it’s all your own money, time and decision making. The business goes on your own tax return, to make it very simple. All the profits you would receive go straight to you and it would take the least amount of money to operate. However, all the liability lies on your shoulders. If the company gets sued due to bad quality products everything you own such as your house, car, or any other valuable assets could be taken away to pay the cost of the damages. An example of this business practice would be a small store or a restaurant.
Partnership is a little different in the fact that there are 2 different types. One being general partnership where 2 or more partners contribute everything to the business, money, skills, time, and their effort. With this type each partner is personally liable for all debts of the company and can get their assets taken away to pay bills owed to other. Each partner has an equal say on what goes on as well. Sometimes this is a good thing for people with the skill of inventing and the other with the skill of business. On the other hand, if the two do not agree it cause great tension and economical stress, since generally the product line is not moving during the dispute.