Business Organization and Intellectual Property: Problems
Chapter 3 Exercise / Problems: #1 p. 113
1. [Business Organization and Intellectual Property] Phil Young, founder of the Pedal Pushers Company, has developed several prototypes of a pedal replacement for children’s bicycles. The Pedal Pusher will replace existing bicycle pedals with an easy-release stirrup to help smaller children hold their feet on the pedals. The Pedal Pusher will glow in the dark and will provide a musical sound as the bicycle is pedaled.
Phil plans to purchase materials for making the product from others, assemble the products at the venture’s facilities, and hire product sales representatives to sell the Pedal Pushers through local retail and discount stores that sell children’s bicycles. Phil will need to purchase plastic pedal and extensions, bolts, washers and nuts, reflective material, and a microchip to provide the music when the bicycle is pedaled.
A. How should Phil organize his new venture? In developing your answer, consider such factors as amount of equity capital needed, business liability, and taxation of the venture.
There are a few different ways I believe Phil could organize his new venture. Based on the discussions this week he could chose to form a partnership (regular or LP), a corporation (C, S, LLC), or proprietorship. In this particular case, and being that Phil is still in the developmental phase, I believe the best way to go would be a proprietorship. The cost is still low, the need for employees (sales person) is at a stage where only one is currently needed, and the overall liability is still somewhat low.
I also believe, that depending on how fast the idea or the venture takes off, could eventually lead to the need to change the way the business is set up. Moving from a proprietorship to an LLC might be a viable option in the future.
B. Phil is concerned about trying to protect the intellectual property embedded in his Pedal Pusher product idea and prototype. How might Phil consider protecting
1. [Business Organization and Intellectual Property] Phil Young, founder of the Pedal Pushers Company, has developed several prototypes of a pedal replacement for children’s bicycles. The Pedal Pusher will replace existing bicycle pedals with an easy-release stirrup to help smaller children hold their feet on the pedals. The Pedal Pusher will glow in the dark and will provide a musical sound as the bicycle is pedaled.
Phil plans to purchase materials for making the product from others, assemble the products at the venture’s facilities, and hire product sales representatives to sell the Pedal Pushers through local retail and discount stores that sell children’s bicycles. Phil will need to purchase plastic pedal and extensions, bolts, washers and nuts, reflective material, and a microchip to provide the music when the bicycle is pedaled.
A. How should Phil organize his new venture? In developing your answer, consider such factors as amount of equity capital needed, business liability, and taxation of the venture.
There are a few different ways I believe Phil could organize his new venture. Based on the discussions this week he could chose to form a partnership (regular or LP), a corporation (C, S, LLC), or proprietorship. In this particular case, and being that Phil is still in the developmental phase, I believe the best way to go would be a proprietorship. The cost is still low, the need for employees (sales person) is at a stage where only one is currently needed, and the overall liability is still somewhat low.
I also believe, that depending on how fast the idea or the venture takes off, could eventually lead to the need to change the way the business is set up. Moving from a proprietorship to an LLC might be a viable option in the future.
B. Phil is concerned about trying to protect the intellectual property embedded in his Pedal Pusher product idea and prototype. How might Phil consider protecting