Starting and Maintaining a Business

Student's Name

Institutional Affiliation

Course Code and Name

Instructor

Date

Starting and Maintaining a Business

Memorandum

Date; 4/3/2020

To: Paula Johnson and Marty Rogers

From: Students Name

Subject: Starting and Maintaining a Business

Part I

The best way to go about the partnerships is to form a legal partnership. A legal partnership is a
contractual business relationship between two or more people that creates a joint business
enterprise and is governed by contract laws. In this case, the decision to partner is for profit. You
must form a legal partnership to ensure that both individuals are responsible for the actions of the
business. The reason behind this is that it will enhance limited liability protection. Notably, a
partner's liability to the partnership and other partners is limited to the amount of money
considered. The tax consequences will be taxed as a partnership. This means that everyone will
report their share of the partnership's income, deductions, and credits tax return. The liability
consequences for the business partners are that you will be liable for all the debts and obligations
of the partnership. Additionally, in agreement, you will have unlimited liability for the debts and
obligations of the association.

The legal formalities on the partnership agreement should include the following:

i. Nature of business and duration of the partnership

ii. Capital contributions, including cash, property, and services contributed by each partner

iii. Partners' rights and duties, including the authority to bind the partnership, withdrawal from
the business, and division of profits or losses

iv. Profit-sharing formula to be used in allocating profits and losses

v. Procedures for changing the terms of the agreement; how disputes will be resolved; how to
terminate the partnership; buyout rights; and tax treatment.

The types of issues that you may have for partnership include;

i. Taxation of partnership profits and losses

ii. Valuation of the business interests and contributions of partners

iii. Dividing up assets on the dissolution of the partnership.

Part II

In giving my advice, I would encourage you to read the incorporation documents available on the
Internet. You should also contact a lawyer or accountant to help with the process and an
accountant to help with the financial aspects of incorporating. You may also get the state in
which you want to include.

The following procedure will be undertaken.

File paperwork with the state and pay a filing fee. You may also have to pay an annual fee for
being incorporated. Secondly, decide on a name for the company and where it will be located.
You will also need an address to file their paperwork with the state and receive mail from
customers' suppliers.

You will decide on how the business structure to be set up. This can affect how you report profits
and losses on their taxes and how much money you must pay in taxes each year. Additionally,
look into other business structures besides corporations to borrow ideas relating to the same and
consider if you would like any of their assets protected in case of a lawsuit filed against them or
their corporation.

The legal concerns to be aware of include:

ii. Make sure that the taxes are filed on time, every time.

iii. Consult with an attorney if you have any questions about the paperwork.

iv. Make sure that their business is adequately insured if someone gets hurt on the job or if
something is damaged while working.

v. Make sure that you have the necessary permits and licenses from the government to operate
their business.

vi. Set up a payroll system and withhold taxes from each employee's paycheck.

vii. Consider whether you would like to hire independent contractors or employees and how this
may impact tax liability.

It is a good decision because it allows you to hire more employees, which would increase the
number of sales, giving you the ability to make a more significant profit. It also allows the
opportunity to expand into another state by opening up another location, allowing for increased
profits and a greater public reach. In addition, by incorporating, you are legally responsible for
all debts incurred by the company during its time of incorporation. This would then allow you to
take out loans, expand the business into more states and allow for a more significant profit in the
long run.

Part Three

The options are either to franchise or not to franchise. If you decide not to franchise, they would
need to build another factory that could produce enough dog cakes at one time. It would be
expensive, and you will have to hire more employees. On the other hand, if you decide to
franchise, you could sell production and marketing rights in return for a percentage of profits.
You will not have to worry about building a factory because there are already dog cake factories
that can produce doggie cakes. You will also not need a marketing department because the
franchised company will advertise for them in exchange for a percentage of their profits.

Additionally, if you decide to franchise, you will not have to hire many employees because the
franchised company would employ all the employees. You will only need a few employees in
their headquarters, and you could travel around the country promoting their products and running
seminars to train franchise owners.

You do not want to give up control of their business, but you also realize that you cannot expand
nationally without help. You decide to look into franchising further. You can get either franchise
to an existing chain, or you can sell recipes and branding to a franchiser, or you can sell the
entire business to a franchiser. You decide to investigate franchising to an existing chain. You
research different chains and find that you would only be able to afford one of the larger chains,
but the other ones do not have an interest in doggie cakes. You decide to research the smaller
chains that have shown interest in Doggie Cakes. If you were to sell their business, the company
would be in the hands of someone who may not share the same vision and passion for doggie
cakes that Marty and Paula have. By franchising, you can ensure that quality control measures
are in place and will continue as more stores open up around the country.

Part IV

The advice that I will give is to fire the Board of Directors. This is because the directors could be
viewed as fiduciaries to Doggy Cakes and have breached their duties. It would breach their
fiduciary responsibilities, entitle Doggy Cakes to sue them personally. There would likely be no
money left in the company, so you may need to declare bankruptcy if you are sued personally. If
this were to happen, Marty and Paula would not get paid for their services as officers or directors
of Doggy Cakes. Therefore, firing the Board was in their best interests.

The best action plan is to fire the Board and dissolve Doggy Cakes. The co-mingling of funds is
a severe violation. Marty and Paula should fire the Board immediately. You should also dissolve
Doggy Cakes and establish a new charity with a Board of directors independent of Marty and
Paula.

Dissolution is a legal proceeding in which a corporation ceases to exist, and its assets are
liquidated and distributed to another entity, the corporation's creditors, or both. It does not end
the liability of its owners for the corporation's obligations. The process of dissolving doggie
cakes will be similar to that of any other corporation. The process involves filing articles of
dissolution with the secretary of state in the state where the corporation is incorporated. The
reports of dissolution must be signed by all corporation directors and include a statement that
you have discharged their duties and obligations to the corporation. The directors then submit a
certificate from the secretary of state stating that you have filed their articles of dissolution with
them. It is accomplished by writing a personal check to each creditor or paying them off through
an escrow account. If you choose to use an escrow account, you should not select the escrow
agent who will manage the account.

The process is complicated and will likely require professional assistance. You should consult
with a lawyer specializing in nonprofit law for advice about how best to proceed with dissolution
and for help drafting the articles of dissolution, certificate of status from the secretary of state,
and any other documents necessary for dissolution.