Presented below are four independent situations: 

1. After passing their final accounting exam, four students put together plans to offer bookkeeping services to small companies. The students have signed an agreement that details how the profits of this new business will be shared. 

2. Darien Enns has had so many people ask about the new solar and wind equipment he recently added to his home, he has decided to start a company that will offer planning, design, and installation of alternative power technology. To launch the business, Darien will need substantial funding to purchase a service truck, a special crane, and the solar- and wind-generating equipment. He expects the business to grow quickly and that he will have to hire additional employees and triple the number of trucks and cranes owned by the business. Darien has no way to provide funding for the start of the business, and he also understands that the expected growth will require large additional investments. 

3. After working in the construction industry for several years, Joeline Pal has decided to offer her own roofing services to homeowners. 

4. Frank Holton owns a small two-seater airplane to fly hunters and hikers to remote areas in northern Ontario. Demand for Frank’s services has grown so much that he plans to hire additional pilots and purchase four larger planes. Frank will also purchase liability insurance in case of accidents, and plans to maintain control of the company. 

Instructions 

In each case, explain what form of organization the business is likely to take: proprietorship, partnership, or corporation. Give reasons for your choice.

Since a corporation is a separate legal entity, what gives employees the authority to complete a transaction on behalf of the company?