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Scenario:
Sam, Joe, and Susan are interested in starting a computer graphics business. Susan has computer graphics skills, but no financial resources. Sam owns several businesses and is able to invest $100,000 in "seed" money, but possesses no experience in computer graphics. However, he wants some input in the business due to his substantial investment. Joe has excellent marketing and sales skills, which are considered an important factor in this type of business. He has approximately $25,000 available to invest. The business entity once formed will seek a loan an additional $100,000 for the start-up.
1. Which of the following business forms would be the best to use for this start up and why:
Sole proprietorship
General partnership
Limited partnership
Corporation
Limited liability Company [LLC]
2. Unbeknownst to Joe and Susan, Sam after the business is formed begins to use the business' checking account to pay all his personal bills and bills incurrent by his other businesses. Are his actions ethical? Why or why not?
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