Presented below are five independent situations:
1. After passing their final accounting exam, four students put together plans to off er 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 off er 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. Joanna Hirsh lives 12 months a year on Look About Bay, where most of her neighbours have summer cottages. To generate income in her retirement, Joanna has decided to offer cottage inspection services for residents while they are away. Joanna will need a snowmobile to access the buildings in the winter. She also hopes to expand her service to surrounding areas. Expansion will require hiring more inspectors and purchasing additional snowmobiles.
4. After working in the construction industry for several years, Joel Pal has decided to offer his own roofing services to homeowners.
5. 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.
Taking It Further
Since a corporation is a separate legal entity, what gives employees the authority to complete a transaction on behalf of the company?