replies that are 300–600 words in response to other classmates’ threads. In each reply, indicate whether you agree with the other classmates’ opinions, why their assessment of the situation is or is not accurate, why the original posting is or is not in agreement with your assessment of the situation, and what should be done differently. For each thread and each reply, you must support your assertions with at least 3 outside sources (other than the text and course materials) and cited in current APA format. Acceptable sources include: books, legal cases, articles, the Bible, etc. Sources should be more substantial than basic internet dictionaries.
Reply to Norma V. G The object of this paper is to review a case study involving a Christian woman, named Betty who has chosen to a new business in North Carolina, a coffeehouse. At this point in her venture, Betty has many decisions to make regarding the type of business structure which would be the best fit for the coffeehouse.
Types of Business Structures
There are several types of business structures that have both advantages and disadvantages, with legal and tax implications that must be considered. It is vital that Betty research each type of business structures and what are the regulations regarding them in the state of North Carolina. The following business structures, sole proprietorship and limited liability corporation, should be considered.
Sole Proprietorship
According to the U. S. Small Business Organization (2013), a sole proprietorship is the simplest and most common structure that is used to start a new business. This type of structure is an unincorporated which is owned and operated by one person with no distinction between the owner and the business (www.sba.gov). The owner receives all profits and is held responsible for all debts, losses, and liabilities. Since the business and owner are the same, the business is not taxed separately. It is the responsibility of the owner to withhold and pay all income taxes. Some advantages of a sole proprietorship is that costs are minimal in starting the business, with legal costs being limited to fees for permits and licenses. The owner is not under the control of any other person since they are the sole owner. Due to the business not being taxed separately, it is not difficult to meet tax filing requirements. The tax rates are typically the lowest of the business structures (www.irs.gov). While this business structure is easy in the startup stage, a disadvantage is that the owner can be held personally liable for all debts and obligations of the business which can include liabilities incurred as a result of employee actions. Being a sole owner can also make it difficult to raise funds for the company. A sole owner cannot sell stock in the business and it is more difficult to get investors interested in backing the business. Often, banks are hesitant in make a loan to a sole owner because there a sense of lack of credibility in case of needed repayment if the business does not succeed. The sole owner is ultimately responsible for the successes or failures of all aspects of the business.
Limited Liability Corporation
In contrast to the sole proprietorship business structure, a limited liability corporation, LLC, is often chosen in a small business startup. The U. S. Small Business Organization (2013) describes na LLC as a hybrid type of structure that provides the limited liability features of a corporation and the tax and operational flexibility of a partnership (www.sba.gov). Instead of just a sole owner, the owners are referred to as members and can be one or more individuals. All profits and losses are passed through to each member with them being responsible for reporting each on their personal tax returns. To form an LLC, there are steps that must be followed: choose a business name as permitted by the state, file articles of organization, create an operating agreement, apply for licenses and permits, and announce the business through a public format (www.sba.gov). Some advantages of an LLC are that the members are protected from personal liability due to business decisions of the LLC. An LLC has less registration paperwork and small startup costs. Also, it is the decision of the members to decide who has earned what percentage of the profits or losses. A disadvantage of an LLC is if a member leaves the LLC, it has to be dissolved with the members that are left to be responsible for all obligations to close the business. An additional disadvantage is that members are considered self-employed and must pay self-employment tax and social security (www.irs.gov).
Appropriate Business Structure
It is this author’s opinion that Betty should choose the limited liability corporation, LLC, as the best possible business structure for her coffeehouse. The NC Secretary of State purposes that over the past few decades, North Carolina has earned a reputation on the national and international scale as a desirable place to conduct business, with their state’s laws on LLC being the most progressive in the nation (www.secretary.state.nc.us) . According to Freedman (2000), in the United States, corporations are subject to double taxation, at the corporate and shareholder level, so there are clear advantages to being taxed as an unincorporated firm or LLC (pg. 322).
In filing as an LLC, Betty must choose a name that is not in use by any other corporation or get permission to transfer the name. According to the NC Secretary of State (2013), the name that Betty has chosen is in fact being used. Under North Carolina law, if Betty decides upon a name that is already reserved by another North Carolina corporation, limited liability company, limited partnership or limited liability partnership, it is possible to transfer that name to your company if the current users of the name agree (www.secretary.state.nc.us). However; there is another item to consider in that the name that Betty chooses has to portray the type of business that she will be opening. North Carolina regulations state that “a limited liability company name shall not contain language stating or implying that the organization is organized for any purpose other than a purpose that is lawful and that is permitted by its Articles of Organization” (www.secretary.state.nc.us). The Gathering Place could be seen as an organization other than a coffeehouse, so it is the author’s opinion that she should try to find a more appropriate name that would portray a coffeehouse.
Spiritual Aspects of Choosing Business Partners
It is the opinion of this author that it would be best for Betty to not become business partners with either of the friends that have expressed an interest. Alice would not be a good choice because she is going against her husband’s wishes for her to not work outside of the house and Betty should not encourage her in causing stress in their marriage. Alice and her husband should resolve any of those types of issues before she takes outside employment. Ephesians 5:21 teaches that they should be submitting to one another out of reverence for Christ (NIV). Betty’s neighbor, Erma is not a Christian and has conflicting religious views with what Betty wants to present in her coffeehouse. Conducting business with Erma could be detrimental to the witness of the business. Scripture teaches in 2 Corinthians 6:14, “do not be yoked together with unbelievers. For what do righteousness and wickedness have in common? Or what fellowship can light have with darkness” (NIV). Paul taught that it is not right to join with an unbeliever in any kind of enterprise. MacArthur (2005) purposes that it is impossible for a believer and unbeliever to join together in any business arrangement because it will not bring glory to God (pg. 1633). As Christians, anything that we do should be for the glory of God.
In regard to Betty’s husband given financial support, this author considered Proverbs 31 that reveals a strong Christian business woman that stands on her own two feet and provides for her family. Her husband supports her but is not actively involved in her business ventures, but scripture teaches that his name is not tainted because of his wife’s doing business. He is listed as being well thought of or having a good name in the city gates. Betty can accept his financial assistance but could run the business. However; her husband, as the spiritual leader of their household, should be willing to pray and give advice as needed.
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