How To Mix Business With Pleasure – A Close Look At Business Structures
Business is business but it is certainly not a pleasure when you have friends and families in it. Can individuals such as families or close friends mix business with pleasure? The only way you can do this is when you are a sole trader or partner in business and you incorporate the idea in a legal way. No other interpretation could be drawn outside of this perimeter. A company has many statutory obligations and it is more bureaucratic, which make it more difficult to mingle. We will use this perspective to look at various business structures, while we see how we can profit by mixing business and pleasure simultaneously.
If you are a sole trader, you stand the risk in any business venture. If you have a friend in the business you can include this person as an employee and not as a partner. If you do, then the status of the enterprise is a Partnership, which will be explained further but in this structure, it is a different ball game for your business.
There are legal implications that involves your operation when you decide to join together with someone, so it is important that a contract is prepared before you take on this responsibility. You must also decide whether your friendship is worth the risk if you want to have your friend working as an employee in your business.
A partnership is the joining of two or more persons with the intention of making a profit. Partnership involves specialized individual with skills that are integral to the business. When this is so, they normally pool their resources together and work together with the intentions of making a profit. Examples of Partnership are Lawyers, Accountants and Contractors.
There maybe someone in the Partnership that has a specialized skill such as an Accounting certificate who can manage payroll or someone who has HR skills who can train others professionally. When this is so, they are normally compensated separately in the appropriation of profits. This means they are contracted to be paid more when profits are shared.
If school mates from college want to start their own accounting firm, they must understand their rights, duties and responsibilities before they carry out their functions as partners. They must not take it for granted that they were class mates.
If someone comes into the partnership with additional skills, example: a Lawyer with an accounting credential, it is expected that he is to be paid more. If a friend or partner decides that he doesn’t want to be part of the day-to-day running of the business but only want to invest, his share of profit must be worked out with an agreement from the rest of partners. this must be recorded as a legal document in the Articles Of Incorporation or Memorandum Of Association, and placed on file.
Companies or Corporation
The company involves the incorporation of seven or more persons whose liabilities are limited. This means that all parties are not obligated to use their assets if the company is wound up or becomes bankrupt. All liabilities are under the entity as the company is a single entity. On a larger scale, this type of business structure never normally incorporate close friends, unless it is a family business.
The skill set of employees are generally fished and recruited from the public. Some family business are corporation and they struggle to keep business together after years as nepotism and dictatorship stifles the operation.
Companies are regulated under the companies act and carry strong federal policies and regulation. The laws for the sole trader and partnership are governed by the state but Company operation carries stiffer penalties, statutory regulations and more regulated polices.
Separate And Isolate
We must separate and isolate as mixing pleasure with companies can have serious consequences. It is reported that many companies are sued because they fail to follow basic ethics. They not only feel the long arm of the law but they suffer socially when their practices are unethical.
When you mix your personal relationships with business you stand to lose and when you decide to make a profit, count your friends out. But when you value your relationship with your friends and you still need them in your business, separate them from the pleasure of friendship and be extremely professional.
The only way we can enjoy business with pleasure is to put your friends in your business as legal partners or committed employees, let them be distinct and never mix both.
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Article Source: [http://EzineArticles.com/?How-To-Mix-Business-With-Pleasure—A-Close-Look-At-Business-Structures&id=7775616] How To Mix Business With Pleasure – A Close Look At Business Structures