When considering what options best suit Betty, and who she should bring into the business, it is very important to consider what are Betty’s goals. As a mature Christian, is she looking to provide a place where people from different branches of Christianity and even different religions can meet, share a cup of coffee and discuss their faith? Or is she looking to start a money making venture that she can eventually expand into other markets where the profitability of the business is the main driving goal? While the case study does not explicitly state what Betty’s goal is, my understanding of the study is in line with the first option and that Betty is seeking to create a place where GOD can glorified, people brought together, and where she can make a small profit on the side. My opinions on what she should do are: form a single-member limited liability company, refuse the capital from her husband, take on Erma as an employee, not a partner, and change the name of her company. Each of these will be explored in detail.
In my perusal of the company options, my amateur decision is that Betty should start her company as a single-member limited liability company (SMLLC). This offers her the protection provided by a LLC, namely her family is not liable for debts incurred by her company (Riser, 2008) while allowing her he freedom of running her company by herself. If the confines of the case study are to be believed, Betty has only three options for a partnership, her husband, Alice, or Erma. None of these would be suitable as a partner for Betty, the reasons for this to be discussed later, and so being single owner would be in Betty’s best interest at the moment. The creation of a SMLLC is allowed under North Carolina law (North Carolina, 1997). The other benefit of the SMLLC is that Betty can decide whether to have her company taxed as a corporation under a S corporation or C corporation tax return or as a disregarded entity and thus taxed as a sole proprietor (Riles & Whitlock, 2003).
There are several drawbacks to the SMLLC. While it does protect Betty’s family from any liability for her company’s debts, that protection does not apply to employment taxes, “…the proposed and final regulations made an SMLLC’s employment taxes the exclusive liability and responsibility of the SMLLC employer… The penalty is separate and distance from the SMLLC’s liability…” (Bishop, 2009 p.478). Also, the rules and regulations regarding a LLC can be quite complex so Betty would be best advised to hire legal counsel during her creation. Also, LLCs are more expensive than sole proprietorship, $150 are required for the start up documentation and then an additional $200 every year with the annual report (NOLO, 2013).
As for the other business types, the second option would be to open a franchise. However, this option should only be pursued if Betty can get, in the contract, a guarantee that she can run the coffee shop as she sees fit and that the only requirements the franchise is looking for is an agreement to buy certain products in exchange for training and start up capital. Seeing how Betty wants to open a Christian coffee shop, this is important or the franchise might not allow her the freedom she wants. The sole proprietorship and partnership arrangements do not protect her family from any business debts and while easier to set up, the risks I feel are too great. Corporations involve multiple layers of codes over benefits, pensions, and taxes that can get very confusing for a first time starter (Anderson, 2004). All things considered, the SMLLC allows Betty to run the coffee shop as she wants, protects her family from business debts, and given the choice of partners, allow her to do it on her own. There is one caveat, if Betty were to find someone suitable to bring on as a partner, then my advice would be to start as a LLC, but until such time, the SMLLC seems to be the best fit.
The case study notes that Betty’s husband would like to put some capital towards her new coffee shop. My advice would be to refuse this financial aid if it involves paying her husband back either in the exact amount or with interest. My reasoning here is not financial but relational and spiritual. Shedding light on this is a verse from Proverbs which says, “The rich rule over the poor, and the borrower is slave to the lender” (22:7, NIV). Meaning, when anyone borrows money, a relationship is formed that immediately overrides any pre-existing relationship. The owning of money creates a servant-master dynamic where the lender is now in a position of power. Dave Ramsey, noted Christian financial advisor, strongly advices against loaning money to family or a friend, he notes that one survey discovered that 57% of people who loaned money to friends, saw their relationship ruined because of the transaction (Ramsey, 2009). He says that giving money is perfectly fine, but to loan money is to insert the high potential of strife and animosity over the loan. If Betty’s husband where to give the money to Betty as a gift, I see no reason for her not to accept it. However, her marital relations should come before her business and thus she should not accept a loan from her husband for any reason.
Now for the people wanting to be involved in Betty’s business. Her husband has no desire to be involved in the running of the company and we have already discussed the matter of his financial offer. Alice should not be hired as either a partner or employee and Erma should be brought on as an employee only. First I will look at the reasoning behind the Alice decision. Before I begin, it should be noted that the hiring or non-hiring of individuals based on religious reasons moves the discussion into very tricky ground that I am little aware of at this time. Obviously the Civil Rights Act expressly forbids discrimination in hiring, firing, or promoting “because of such individual’s race, color, religion, sex, or national origin” (1964). Betty must make clear in the hiring of any individual that the goal of the coffee shop is to bring Christians together for discussions with other Christians as well as with non-Christians. They should know that Christian objects will be prominently displayed and that at times the employees might find themselves approached about their religious views. However, Betty must make equally clear that her promoting of her employees will not be based on religious grounds and neither will their firing. Now that has been made clear I will continue with the reasons.
Having said all that, the reason not to hire Alice is based on religious views, though ones that both of them purposely share. The main reason here is the husband’s opposition to his wife’s interest in working outside of the home. This is a very touch subject, the role of husband and wife and the Biblical issue of headship and submission. Before continuing, lets first consider the goal of the Christian life, praising and honoring GOD in all we do, and showing others the glory and majesty of our Heavenly Father. As Paul wrote, “Whether you eat or drink, or whatever you do, do all to the glory of GOD” (1 Cor 10:31). If Alice were to go against her husband’s wishes and work outside the home, how would this be glorifying GOD, which is our ultimate goal in life? This would probably lead to Alice’s husband carrying bitter resentment towards the church and a hardening of his heart towards the Word, is that worth Alice working outside the home? Some might object and say that submission of this kind does not come into play when the other spouse is an unbeliever, but Peter addresses this when he wrote, “Likewise, wives, be subject to your own husbands, so that even if some do not obey the word, they may be won without a word by the conduct of their wives, when they see your respectful and pure conduct” (1Peter 2:1-2). While submission is not something we like to talk much about, the Bible places the husband as the head of the family in the same way that Christ is head of the church. My advice to Betty would be to counsel her sister in this regard as she may not be fully aware of it, with her being a new Christian. Perhaps she and Alice could sit down with Alice’s husband and explore why he desires such and see if they can convince him otherwise. In this instance however, I would have to advise Betty to not hire her sister due to the Bible’s higher calling for its adherents.
As for Erma, I do not believe she should be brought on as a partner as her lack of faith could be damaging to the direction that Betty wants to take. As an employee however, she can provide insight into how others see faith and help Betty shape her coffee shop to be inviting to all who have questions regarding Christianity, regardless of their personal belief. It must be made clear to Erma though that she will be working in a religious environment and surrounding by people asking questions about religion. This should be put into writing so as to protect Betty from any possible retaliation that Erma might have from working in a religious setting. The reasoning for this caution is that one can feel discriminated against where there is no purposeful intent to discriminate (Greenwalt, 2001-2002). From a spiritual perspective, what better way would there be to witness to Erma about the faith, than to hire her and treat her with the same respect and love that Betty shows to all Christians. To see such a faith in action every day would have to be a powerful voice for the faith that can hopefully reach Erma.
Betty’s proposed name for her coffee shop, “The Gathering Place,” could have potential were it not for the fact that fifteen other businesses have that name throughout the state of North Carolina, four of them being LLCs (Department of the Secretary of State of North Carolina, 2013). In North Carolina it is important that LLC’s have distinct names from each other, for instance, after “The Gathering Place” the other LLCs follow it with, “…of Blue Ridge, …Publishing Company, …at Roaring River Vineyards, …of Sanford” (Department of the Secretary of State of North Carolina, 2013). If Betty were to name her coffee shop The Gathering Place then she would have to follow it up with something else in order to distinguish it from the other companies similarly named. In order to properly name her company, Betty needs to decide what her vision for the shop is. In an article about company naming, the author writes that, “Every entrepreneur needs a brand strategy. Essentially, that means knowing how you want your business to be perceived by the customer” (Carr, 2012). So does Betty want to be perceived as a hip place for young people to gather, does she want to keep it local, does she have dreams of expanding, or does she want to attract an older more mature crowd? These are questions that are very important in knowing what to call her business. As for trademarking, it would be very difficult if not impossible given the fact that multiple other businesses have that name. My advice would be for Betty to strive to find a better, more unique name by which to brand her business.
References:
Anderson, B. L. (2004). Benefit issues regarding partnerships, s corporations, and sole
proprietorships. Journal of Pension Benefits, 11(3), 26-31.
Bishop, C. G. (2009). Through the looking glass: status liability and the single member and
series LLC perspective. Suffolk University Law Review, 42(3), 459-492
Carr, N. (2012, Oct 19). Naming a business key to marketing. Toronto Star.
Civl Rights Act of 1964, 42 U.S.C. §§ 2000e to 2000e-16 (1994 & Supp. 2000)
Department of the Secretary of State of North Carolina. (Accessed 2013, Dec 5). Corporation
Name Search. Retrieved from http://www.secretary.state.nc.us/corporations/searchresults.aspx?
onlyactive=OFF&Words=ALL&searchstr=the%20gathering%20place
Greenawalt, K. (2001-2002). Title vii and religious liberty. Loyal University Chicago Law
Journal, 33(1), 1-56.
NOLO. (Accessed 2013, Dec 4). How to form an LLC in North Carolina. Retrieved from: http://
www.nolo.com/legal-encyclopedia/north-carolina-form-llc-32045.html
North carolina: Allow single-member LLCs. (1997). State Tax Review, 58(41), 3-4.
Ramsey, D. (2009, Sep 15). The danger zone: Why loaning money is anything but funny.
Retrieved from http://www.daveramsey.com/article/the-danger-zone/
lifeandmoney_relationshipsandmoney/
Riles, J., & Whitlock, B. (2003). The ABCs of LLCs. The National Public Accountant, , 35-36
Riser, C. M. (2008). Asset protection basics: Using partnerships and LLCs. The Practical Real
Estate Lawyer, 24(1), 27-40.
Last Completed Projects
| topic title | academic level | Writer | delivered |
|---|