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1Gemma and James’ Phoebe InventionStudent’s NameInstitutional AffiliationCourseInstructor Due Date
2Gemma and James’ Phoebe InventionIntroductionSelecting the type of entity to organize your business is the most challenging but essentialthing for entrepreneurs. The decision made for each company has to meet various criteria suitable to the owner(s) as well as the state law. Every entrepreneur has a dream to get maximumprofit from an investment. However, business activities are sometimes faced with uncertainties that require legal protection. The business is also expected to expand depending on future goals. Gemma and James, in this case, provide an insight into these organizational considerations made before forming a business.The Type of Business OrganizationLimited liability company combines characteristics of cooperation with those of a partnership or sole proprietorship. Gemma and James can use L.L.C. because it is much easier to set up compared to a corporation and offers more flexibility as well as protection. The primary reason to prioritize this type of business organization is because of its limited liability. The entity will be able to separate business assets from the individual property, which protects the owners from L.L.C.'s debts and obligations (Ireland, 2010). Moreover, the company members have the power to decide the number of individuals to join them with no limit. In addition, the members can gain more because profits and losses are listed on the personal tax return. L.C.C. provides what most investors require.RequirementsRequired and needed documentations are crucial before the commencing of the business. The requiredgovernance documents are mandatory as directed by the state law before the two can start their business. On the other hand, the needed documentation is not mandated by the
3state law but help to prevent future complications or catastrophic lawsuit. Firstly, the process begins by listing the required documents that Gemma and James should avail as mandated by thestate law. They will need a certificate of the organization (an article of the organization) to prove the existence of the L.L.C. within the state. The article organization provides necessary information about the business. The minimal requirements for the article include (1) L.L.C.'s name;(2) purpose ("to engage in lawfully permitted activity allowed for an L.L.C.); (3) principle mailing address to the L.L.C.;(4) duration of the company;(5) name and address of the registered agents of the L.L.C. (person to deliver legal documents); and (6) the management structure (two managers for this case). Secondly, the needed requirements will serve as protective agreements for the L.L.C. Due to some moderate conditions in the article of organization, vital governing aspects may be covered in the operating agreement. The operating agreement will list the functions of each member. The document will give a procedure for allocating profits and losses.