1. Gordon has been giving dance lessons for Elvira`s Studio for the last three years. He...

1. Gordon has been giving dance lessons for Elvira`s Studio for the last three years. He decides to strike out on his own and open his own dance studio. Discuss the relative merits of sole proprietorship and corporation. Which do you recommend?

2. After five years, the business has been growing steadily and Gordon wants to open other location. On a personal level, Gordon plans to marry and purchase a home as well as some income property. Should he change his business form to a partnership or a corporation?

Expert Solution

As Gordon has been giving dance lessons for a Studio for last three years, he must have a good number of loyal customers base, which he can divert o his own dance studio. If Gordon is starting independently, here are some of the Benefits:

1. There will be flexibility in work timing and place as Gordon is working independent, he can choose the best suited conveniently placed location and decide the timings as per his needs. There is greater flexibility when one works as sole proprietor.

2. There is great opportunity to expand and grow. As you are working for yourself, this brings in good amount of confidance in oneself.

3. There is increase in earnings as you are no longer a salaried at some other studio.

As, the business is small and he is just starting with independent , he should go for proprietorship.

Corporation is ideal, in situation where business has good scale and can still be scalable. As Gordon is planning for expansion, he can go for corporation.

jeff jeffy answered 1 month ago

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