Tree House of Doom

Burglar Bob and Morose Myrtle own a haunted house called the “Tree House of Doom!” The Tree House of Doom does a brisk business, and generates substantial profits for them. They have no written agreement between them, but Myrtle has been the primary source of funds for the business, and Bob handles most of the day to day operations.

Bob and Myrtle split all of the profits 35% to Bob, 65% to Myrtle. They are thinking about hiring an employee, Vince Victim, to drive out and pick up supplies every night. If they hire Vince, they don’t want to pay him an hourly rate, but think it would be better for them if they just give him a split of the profits. Bob and Myrtle are each willing to give up 5% of their shares, and then Vince will get 10% of whatever profit is made each day.

The Commonwealth of Massachusetts has just passed a law eliminating Limited Liability Companies and S-Corporations, so the only business entity forms available are Corporations, Sole Proprietorships, General Partnerships, and Limited Partnerships.

Before hiring Vince, Bob and Myrtle come to you and ask you what they should do. Please write a paper that is no longer than 4 pages, which explains the following:

1: What happens if they hire Vince without writing up an agreement on the business ownership? Who will own it and what sort of business entity will it be? What sort of liability do they have if Vince hits someone with his car while he’s out driving to pick up supplies?

2: What happens if they put their business arrangement into a contract. What form of business entity do you recommend that they take on and why? What liability will they have if Vince hits someone with his car while out driving to pick up supplies in that case?