Planning for the Future

Liam and Noah William started selling T-shirts out of the trunk of their car at craft shows around the southern United States 4 years ago. Their business has grown dramatically. Other than paying taxes on their earnings, they have not done any formal business planning. In fact, their business has been so popular with crafters that they have started accepting online orders. They are now at a point where they are considering quitting their day jobs and focusing on the T-shirt business full-time. Liam and Noah need some help thinking about their business.

Instructions

Use the information from this chapter to answer the following questions.

1. Given the way the Williams started their business, what form of business structure do they currently have? Is this an appropriate business structure?

2. What type of business structure can they use that would limit their liability but be easy to set up and manage?

3. Two years ago, Liam and Noah purchased an original oil painting for $43,000. When they bought the painting, Noah was sure that the piece would soon become collectible. Now that their business is doing well, they want to expand. Rather than take out a loan, Liam has suggested selling the painting. If they sell the painting at auction for $50,000 and pay a 20% sellers fee, how much will they make on the sale? Show the actual amount and the percentage gain or loss.

4. If they both quit their day jobs, what will they be giving up in addition to wages and salaries?

5. When they quit their jobs, will they be eligible for unemployment benefits?