Acme Fireworks Company Research Paper Example | Topics and Well Written Essays - 1500 words

Acme Fireworks Company - Research Paper Example The current business entity must be evaluated, and assessment made for any changes needed. The product liability needs to be assessed and measures put in place to mitigate it as much as possible. The contract obligations, which apparently have increased with increase in product’s demand, also need to be assessed and capacity to fulfill them without defaulting evaluated. The company also needs to evaluate the best option for adding new employees in order to sustain the growth of the business. The current form of Acme is a sole proprietorship in the sense that one person owns it. Several advantages accrue to this form of business from a legal point of view. Firstly, starting a sole proprietorship is less complicated in terms of legal procedures required as compared with other forms of businesses, that is, corporation and partnership. In addition, Acme has no limitation to the type of business activity it can engage in. Diversification of the business to other lines products, totally different from fireworks, or entering into contracts, which are not related to the original type of business activity the entity was created would be legal and consistent with all laws, because the ultra-vires doctrine applies to formal corporations and not the sole proprietorship form of business. The main drawback of this form of business is unlimited liability. The owner of the business is directly and fully liable for any debts, losses, or violations from the entity. For instance in a situation where the business is indebted, the owner could be sued and be compelled to satisfy the debt from personal funds. In the case of a corporation, the owners liability is limited in the sense that the shareholders of the company cannot be held directly responsible for debts and violations from the business. In the case of debts, liability is to the extent of an amount of un-paid capital or amount the members undertook to contribute in the event winding up of the