Posted: August 4th, 2022

Unincorporated business with its advantages and disadvantages

Business Law
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Business Law
Question 1
a. Unincorporated business with its advantages and disadvantages
An unincorporated business means that the business does not have a separate legal identity from its owner, and thus the owner is liable for any action and inaction of the business to the point they can be sue for the activity or inactivity of the business (Ozcan, 2011, 201). Additionally, the unincorporated business can exist in different forms, such as proprietorship, family trust, and partnerships.
Advantages of unincorporated business
Unincorporated businesses have different advantages. First, the information and secret of the business are only held by the owners. This fact makes it easy to navigate through problems by making appropriate decisions. The unincorporated businesses are simpler to operate as comp0ared with other businesses since there are fast decision making and implementation since there few or no bureaucracies involved Ozcan, 2011, 245). More so, it easy to start and operate unincorporated businesses since they require less capital, and their management is not complicated. Additionally, the business has numerous tax advantages, such as avoiding double taxation. The legal structure of the unincorporated business only allows for taxation based on personal income.

Disadvantages of unincorporated business
The unincorporated business is associated with different disadvantages. First, the business has few sources of capital, making it hard to grow. The business sources of capital are few, and they include personal savings, contributions from family. The few or no external source of capital makes the businesses to lack growth capacity. Additionally, the owner of the unincorporated business has limited liability, and they can thus be used for the actions or inaction of their business.
b. Incorporated business
The incorporated businesses are a separate legal entity from their owner; thus, the owner is not liable for the actions or the inactions of the business. The business is recognized by the law and the government.
Advantages of an incorporated business
The incorporated businesses have their share of advantages. First, the business has liability protection such that the owner is not personally held responsible for the action and inactions of the business (Ozcan, 2011, 291). Consequently, the business has increased capital due to a high source of capital from external sources such as lenders, financial institutions, and members of the public.
Disadvantages of unincorporated business
The advantages of the unincorporated business entail that the business is expensive to run due to the start-up capital and expenses involved. Consequently, an unincorporated business suffers double taxation since it has to pay income and corporation taxes. Furthermore, the business is associated with high paperwork on top of the filling of two tax returns. The other paperwork required includes audit books, bank account records, transfer register, detailed books, and meeting notes.
c. Limited liability partnership
The limited liability partnership presents a partnership business where all partners have limited liabilities meaning that all the partners are not personally held liable for the negligence, action, inaction, and misconduct of another partner (Collier et al., 2014: 2024 – Essay Writing Service. Custom Essay Services Cheap. P., 171). The establishment of the limited liability partnership means that every partner is held personally liable for their own actions or inaction, and other parties are not affected. Examples of limited liability partnerships where people are liable for their actions to include law firms, dental offices, veterinarian offices, auditing firms, and real estate agencies.
d. Additional capital
Jim will be in need of additional capital since his bonus payment cannot adequately cover the needs and expenses of the business (Collier et al., 2014: 2024 – Essay Writing Service. Custom Essay Services Cheap. P., 171). In this regard, Jim can source additional capital form venture capital, angels, business incubators, government grant and subsidies, loans from banks or any other financial institution, credit unions.

Question 2
a. Merger
A merger takes the combination of two companies to form a single large company. The combination of the businesses takes the transfer of ownership through cash payment or stock swap between the merging companies where they surrender their stock and issue new stock as a single entity.
Steps of business merger
The merger is implemented as a series of functions and operations. First, the leaders involved begin with the determination of market growth to evaluate the growth opportunities in the business operation (Collier et al., 2014: 2024 – Essay Writing Service. Custom Essay Services Cheap. P., 191). Consequently, Jim needs to identify the organization or company to merge with. The acquisition process takes the identification potential merger that will enhance strategic financial growth objectives. Furthermore, the Jim business moves to the assessment of strategic financial position to enhance the identification of benefits, risks, and opportunities to be experienced in the case a merger is achieved. Moreover, Jim moves to the decision-making point based on the information he holds. Jim will accept the merger in the case there are financial and strategic benefits involved. Jim will move to the evaluation stage that involves the assessment of the target value and identifying alternatives to the structure and selection of the structure to be used in attaining the merger. Finally, the merging parties exercise due diligence, negotiation, and execute the merger transactions.

b. Professional involved in the merger
There are different professionals involved in the successful formation of mergers. The different professionals include financial analysts, valuation professionals, and attorneys/lawyers. The financial analyst evaluates the opportunities, benefits, and risks involved in the merger so as to advise the interested and relevant parties appropriately (Collier et al., 2014: 2024 – Essay Writing Service. Custom Essay Services Cheap. P., 201). The financial analyst advises the interested party on the viability of the merger. Consequently, valuation professionals engage in the valuation of the companies merging to ensure that a fair deal is reached. The valuation professionals conduct the valuation of the assets, goodwill, and other expenses to ensure that the business deal is fair. Finally, the lawyers are actively engaged in ensuring that the agreements, contracts and other legal documents are appropriately handled and acted on in the interest of the merging parties.
C. Issues to be agreed on in a merger
There are different issues that need to be addressed and agreed on before the merger deal is sealed. The different things and aspects to be discussed and agreed among the working capital adjustment, the organizational representatives, target indemnifications, several joint liabilities, organizational structure, consideration issues, holdback issues, financial statement representation, pre-closing covenants, employee and benefits issues, indemnification provisions, and dispute resolutions.

Question 3
a. Acquisition
The acquisition in a company entails the situation one company purchases the part or full shares of an organization. Acquisitions enhance part or full ownership of another company (Collier et al., 2014: 2024 – Essay Writing Service. Custom Essay Services Cheap, p. 193). The acquisition of companies is made in the form of percentages such that when one company purchases more than 50% of the target firms stock and other assets empowers the acquirer to make decisions in the newly acquired company without the approval of the shareholders.
Different ways of acquisition
Jim can acquire the share and stock of the competitor firms in different ways. In this regard, Jim can acquire another company through horizontal acquisitions. The horizontal acquisition takes acquiring companies with similar products such that Jim will be in a position to expand their range (Collier et al., 2014: 2024 – Essay Writing Service. Custom Essay Services Cheap, p. 203). Additionally, Jim’s business can adopt concentric acquisition where two businesses share customers, but they offer different services. These approaches ensure that Jim Company is able to acquire more customers and businesses, thus increasing the level of profit and revenue.
b. Significance of business acquisition
The acquisition of a company ensures that one is able to control the acquired, especially when the acquisition is more than 50%. This approach will enable Jim to have control of a competitor, thus increasing the revel profit and revenue. Consequently, the acquisition ensures that one participates in decision making, thus having an influence. In this regard, having a position to make a decision makes it possible to reduce competition, thus achieving sustainability in the future. Additionally, the acquisition will enable Jim Company to appoint a director in the acquired business, thus making it possible to influence operations to achieve business goals and objectives.
Question 4
a. Strategic Alliance
Strategic Alliance entails the arrangement between different companies to engage in a mutually beneficial project while each maintains their independence (Buyukozkan, Gulcin, and Nebol, 2008 – Affordable Custom Essay Writing Service | Write My Essay from Pro Writers, 127). Strategic alliances are characterized by partners that have a strategic fit due to uniformity of goals and objectives, the partners engage in value creation to meet the needs, the companies have a joint mission, the companies have a collaborative spirit, and the partners have trust and reciprocity.
The advantages of the strategic alliance are that the business operation experience quality and efficiency, enjoy economies of scale, knowledge sharing, large and expanding customer pool, shared risks and costs, and they have a large source of capital (Buyukozkan, Gulcin, and Nebol, 2008 – Affordable Custom Essay Writing Service | Write My Essay from Pro Writers, 133). On the other hand, the disadvantages are that the differences between the partners result in conflicts, the long term alliances results, and the partners can fail to use the complementary resources, thus harming the parties and the performance goals.
b. Joint venture
The joint venture takes companies and organizations that agree to pool resources to undertake specific business tasks (Killing, 2017, p. 301). The characteristics of joint ventures are that the partners share profit and expenses; the joint venture is terminated when their purpose is accomplished, the control of the operation is done equally, and the contract signed is either written or oral.
The advantages of joint venture profit are achieved at low cost; the business experience flexibility, and the businesses share risks, benefits, and costs (Killing, 2017, p. 341). On the other hand, joint ventures have disadvantages of impossibilities of achieving equal involvement, restricted flexibility, and failure to achieve rapport resulting in disputes.

References
Büyüközkan, G., Feyzioğlu, O. and Nebol, E., 2008 – Affordable Custom Essay Writing Service | Write My Essay from Pro Writers. Selection of the strategic alliance partner in logistics value chain. International Journal of Production Economics, 113(1), pp.148-158.
Collier, B., Blackstone, S.W. and Taylor, A., 2014: 2024 – Essay Writing Service. Custom Essay Services Cheap. Communication access to businesses and organizations for people with complex communication needs. Augmentative and Alternative Communication, 28(4), pp.205-218.
Killing, J.P., 2017. How to make a global joint venture work. In International Business (pp. 321-328). Routledge.
Özcan, B., 2011. Only the lonely? The influence of the spouse on the transition to self-employment. Small Business Economics, 37(4), p.465.

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