Part 1:
Business organization forms. Karen Cup and Dana Bag decide to combine
Part 1:
Business organization forms. Karen Cup and Dana Bag decide to combine their passion for tea with a new business called “Tea Time.” Karen will devote herself full-time to the operation of the business which will include service of food and tea, as well as the sale of tea and related products. Dana has another business in which she operates, and will work at Tea Time on weekends only. Dana will contribute $4000 to the start of the business; Karen will contribute only $1000. They will rent a business location.
a) What forms of business organization could Karen and Dana consider? What are the advantages and disadvantages of each? Discuss the following possible business entities that Karen and Dana can form: a general partnership, a limited liability company, and a corporation.
b) Whichever the business entity that you advise Karen and Dana to form, use the facts above and prepare the required documents to form the business entity. For example, if you suggest that Karen and Dana should form a general partnership, prepare a Partnership Agreement; if a limited liability company, prepare the Articles of Organization and Operating Agreement; if a corporation, prepare the Articles of Incorporation and Bylaws.
Part 2:
Business organization forms Part 2. What would happen to Karen and Dana if the business is not successful, and ultimately, they fall behind on rent, triggering creditor action by the landlord – what kind of bankruptcy would the business go through (i.e., which chapter), and how much exposure do the 2 ladies have depending upon the business structure you selected in response to Question 2 above?
