Personal Finance Chapter 3

Chapter 3: Exercises/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 pedals 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.

The startup costs seem low, considering the materials aren’t hard to obtain or expensive so I would suggest a proprietorship. Starting he should only hire one sales representative; he should be another representative. He is going to take the grunt of the liability but in these beginning stages costs are low so the risk isn’t terribly high. 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 his intellectual property?

I would recommend a patent. If patenting his product is too expensive he could do a trademark, but a patent would provide more protection for him product.
Chapter 5: Exercises/Problems: #8, and #9 pp.181 - 182
The Castillo Products Company was started in 2008. The company