1 Joe operates a local gardening and tree trimming business. Joe also does some light landscaping work for a few of his commercial accounts. Joe is very successful and has enough clients to keep him busy, along with at least three workers, working six days a week. Occasionally, a client rents a piece of equipment from Joe's business. Clients sometimes take their time paying for Joe's services and, therefore, Joe is sometimes late paying his bills. .
Joe's capital is only about $25,000, most of which consists of his new $20,000 truck and his assortment of lawnmowers, chainsaws, edgers, and gardening equipment. Joe's wife handles the books, yet is not involved in actual business operations. The question in this case is should Joe continue to operate his gardening and tree trimming business as a sole proprietorship? .
When reviewing and deciding what type of organization is best suited for a particular business, there are several issues to take into consideration. These Issues include who will manage the business? What liabilities do the members of the business organization face? What laws and regulations do the members need to be aware of concerning forming a certain business entity, and if so, are there additional funds that need to be raised?.
"All businesses rely on people or other organizations, as agents, to achieve the goals established for the business" (Corley, 1999, p. 358). Some of the goals that Joe might be considering when evaluating the entity of his business may include allowing for limited liability and making sure his profit or earnings makeup for his clients failure to pay their bills on time. .
According to what Joe's goals may be, we suggest that Joe changes his existing business as a sole proprietorship into a corporation. The benefits of selecting this business entity once Joe has established investors, includes the option that control and ownership may be held by those with a majority as well as a minority of an investment in the company.
