Adam and Betty have now basically hijacked control of the company, blocked access to bank accounts,...

 

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Adam and Betty have now basically hijacked control of the company, blocked access to bank accounts, business documents, accounting, and funds to anyone but themselves. Camala and Duane have not seen a dime of the profits. Adam and Betty seem to only want to talk about their original buyout offers of $5,000 for Camala, and $8,000 for Duane, with no ongoing ownership. While the facts may vary, such casual business startups among friends or family are common. This scenario demonstrates all the things that can go wrong without proper planning. Question If these friends had come to you before starting the business, how would you have advised them? Include in your analysis: What steps should have been taken before money changed hands? Is an LLC the best option? Some form of partnership? Other options? Explain your choice thoroughly. While the friends each initially contributed cash, how should they value the non-cash contributions of time and labor in determining ownership shares, distribution of profits, etc.? Adam and Betty have now basically hijacked control of the company, blocked access to bank accounts, business documents, accounting, and funds to anyone but themselves. Camala and Duane have not seen a dime of the profits. Adam and Betty seem to only want to talk about their original buyout offers of $5,000 for Camala, and $8,000 for Duane, with no ongoing ownership. While the facts may vary, such casual business startups among friends or family are common. This scenario demonstrates all the things that can go wrong without proper planning. Question If these friends had come to you before starting the business, how would you have advised them? Include in your analysis: What steps should have been taken before money changed hands? Is an LLC the best option? Some form of partnership? Other options? Explain your choice thoroughly. While the friends each initially contributed cash, how should they value the non-cash contributions of time and labor in determining ownership shares, distribution of profits, etc.?

Answer rating: 100% (QA)

Before starting the business I would have advised Adam Betty Camala and Duane to thoroughly discuss and document their business arrangements Heres a breakdown of what steps should have been taken befo... View the full answer