Business Considerations for Acme Fireworks
The risk of going into business is always great especially for sole-proprietors. A sole proprietor is one who single-handedly operates and handles the business. From a legal standpoint, a sole proprietor is identified as a single entity who acts as both the owner and the business itself . Given this distinct feature, a single proprietor therefore, maintains all legal accountability for the business particularly in terms of finances. In the case of Acme Fireworks, it is a small-scale business which rightfully started out using the sole proprietorship business type because it was able to take advantage some of the salient features of sole proprietorship. However, as the business continues to grow and new business offers have started to materialize, the owner of Acme Fireworks needs to reconsider and implement necessary changes as far as organizational structure is concerned. This also include changing the organization type of Acme Fireworks. The sole proprietorship has only been effective when Acme Fireworks was still starting up. Considering that during that time the owner was still not sure whether the public will be receptive of what the organization has to offer. Therefore, there is the necessity to limit the risk. With very few people being involved with the business process and operation, assuming accountability will only be limited to those who have power and control to manage the affairs and transactions of the organization. However, as the business starts to develop and grow, new businesses needs to be address thereby requiring not only the additional finances but also additional workforce. The additional elements incorporated into the old format of the organization would be too overwhelming for one person and might not necessarily be addressed by just one individual. This paper would support the necessary changes the owner of Acme Fireworks should adapt along with the rationale that would explain for the recommendations provided in this paper.
As mentioned earlier, the additional business offered to Acme Fireworks would require the owner to modify its existing business process as well as the major composition of the organization. This includes adding more employees, addition financial budget for production, and the development of written agreements or contracts. In lieu with this, it is recommended that Acme Fireworks adapt a partnership as a new business type for the organization. Initially, by changing the organization type this will bring in a new person into the business with equally the same duties and responsibilities as the owner of Acme Fireworks. This would split the duties among the partners for more efficient management. In addition, this would also bring in more capital into the business because then; a new partner should provide the same investment initially provided by the owner during start up. These are the advantages of a partner compared to a sole proprietorship. A partnership is defined as an arranged agreement between business individuals that specifies a co-labor relationship under the condition of shared profit and losses (Klein, Ramseyer, & Bainbridge, 2013). Since the partners will be sharing the profit and losses incurred by the organization both needs to render equal shares—capital, responsibilities and accountability (Gage, 2004). In this case, all accountabilities will also be shared by the partners as both stand to be representatives of the organization of equal stature.
After a couple of successful businesses and establishing credibility, other business entities would start conducting business with any organization which they perceive to benefit their own business. This happened in the case of Acme Fireworks Business when other businesses and private individuals begun to express their intent and interest in commissioning the service of the organization. However, since Acme Fireworks is new to this type of transactions they should be prepared be address the issues raised by this commission business. In lieu with this, contracts would have to be prepared. Contracts are formal agreement made and entered into by two parties with a created legal obligation between them .
In the case of Acme Fireworks, to prevent losses and to secure the validity of the considerations of the agreement the owners should secure that a contract that will be prepared by the organization are within the realm of the Uniform Commercial Code. The Uniform Commercial Code is created in the effort to correspond the law of sales and other imperatives of commercial transactions . This is necessary to ensure that both parties shall honor the agreement and will not leave Acme Fireworks sole accountable for the expenses incurred by the business transaction should it not prosper for whatever purpose offered by the contracting party.
Specifications of Acme Firework’s Contract
Every contract should necessarily be enforceable. This only implies that all five essential elements of an enforceable contract should be present in Acme Firework’s contract with business organization and private individuals who would like to commission their service. These elements are as follow: (a) offer, (b) acceptance, (c) consideration, (d) capacity, and (e) lawful object. At the moment, the owner is missing consideration and lawful object in the contract that Acme Fireworks has with the other businesses. While there was the offer and a seeming acceptance between the Acme Fireworks and the capacity of Acme to address the demands of the contracting business, it did not specify the specific value of the contract which is presented in the consideration aspect of the contract . In addition, it also does not embody a lawful object or the legal provisions covered within the agreement .
Since the new business proposed is on a regular basis, the most appropriate employment type for this type of organization is hiring regular, permanent employments. However, while there is no formal written contract yet, and the prospect of continued business is gleam perhaps the best employment type for Acme Fireworks is contractual employment. Contractual employment only hires workers temporarily until such time the project is completed. A contractual employment also limits the expenses of having to be forcible impose Acme Fireworks to extend regular benefits to contractual employees as with the organization’s regular employees. This will allow Acme Fireworks to save money and ensure the completion of the project according to the specifically agreed time.
Personal Liability of Acme Fireworks
The risk of personal liability for Acme Fireworks should an accident takes place is considerably high given the existing format of the organization. This is because the owner is also the business itself. Thus, accountability of the issues arise on both entity and shouldered only by the owner and it is not shared unlike if they are in a partnership.
Barnett, R. (2003). Contracts. Alphen aan den Rijn, Netherlands: Aspen Publishers.
Bix, B. (2013). Contract Law: Rules, Theory, and Context (Cambridge Introductions to Philosophy and Law). Cambridge, England: Cambridge University Press.
Gage, D. (2004). The Partnership Charter: How To Start Out Right With Your New Business Partnership (or Fix The One You're In). New York: Basic Books.
Klein, W., Ramseyer, J., & Bainbridge, S. (2013). Business Associations: Agency, Partnerships, LLCs, and Corporations- 2013 Statutes and Rules. Spring Valley, Wisconson: Foundation Press.
Macaulay, S., Braucher, J., Kidwell, J. A., & Whitford, W. (2010). Contracts: Law in Action I. Dayton, Ohio: LexisNexis.
Needles, B., & Anderson, H. (1995). Financial and Managerial Accounting: A Sole Proprietorship Approach. New York: Houghton Mifflin College.
Swindlehurst, J. (2014, November 3). In Brief: Consideration in Contract Law. Retrieved November 16, 2014, from http://www.inbrief.co.uk/contract-law/consideration-in-contract.htm