Business Law

There are 3 owners, Adam, Barbara, and Charley, of Salon Spa, LLC, who have put together their money to invest into a full service hair salon in the metro area. Adam, and Barbara invested $10,000 each, and Charley did not have funds, so it was agreed he would provide some equipment to the salon, such as 4 styling chairs, 4 mirrors, and shelving. It was agreed upon that all the owners were considered equal owners of the salon. Additionally. the owners agreed that Barbara, and Charley would run the salon and handle all the major decisions regarding the business since they had background and experience in running salons prior to this venture. After the rst year, the company has generated $200,000 in sales, and has expenses that require to be paid in the amount of $50,000 (rent, inventory, utilities, etc.). Now its time to split the prots and Adam raises an issue that Charley should receive less than him and Barbara because he did not put in any actual money. Charley argues that Adam should receive less because he has not helped in running the salon. A. Explain the management structure of the salon as structured by the owners in this situation and explain why? B. Assuming that the owners agreed to being equal owners, what would be the outcome in this situation with how much each owner would receive? and explain an alternate distribution agreement that would be more in line with the owners not being all equal? C. Explain how each owner would declare the earnings for tax purposes after the net prots are distributed from the company to each owner under an equal sharing amongst the 3 owners