This paper will examine two business scenarios and determine which business entity is the best choice for each business after taking in to consideration control, taxation, and liability issues. In addition laws and regulations each business must consider in starting the business will be identified along with the risks that each business must protect itself against. Next this paper will examine a construction scenario and identify the employment laws and regulations with which the business must comply in making a decision in regards to which applicant to hire. Restaurant/Bar
Lou and Jose plan to open a sports bar and restaurant where customers socialize and watch sporting events on large-screen TVs that hang around the bar. They do not have much money, but they do have Miriam, a wealthy investor who does not have time to participate in the business, but wants to provide capital to start the business in return for a percentage ownership. Business Entity
For this business scenario the best business entity is a limited partnership or special partnership. There are two types of partners in a limited partnership: general partners and limited partners. General partners invest capital, manage the business, and are personally liable for partnership debts. Limited partners invest capital but do not help with the management aspect and are not personally liable for debts beyond their capital contribution. Lou and Jose will be able to contribute their money and be responsible for managing the business. Miriam will contribute her money and that is all that is required of her. Often in a limited partnership, there is a limited partnership agreement that states the rights and duties of both partners. This document will state the terms and conditions regarding the operations, termination, and dissolution of the partnership. The limited partnership agreement may also describe how profits and losses broken down between the general and limited partners (Cheeseman, p. 261).
The Essay on Business Financing and the Capital Structure
The financial marketplace is the area where companies engaged in financial trading are able to get capital to run. The financial market can also be referred to as capital markets. Stock markets are the place where companies come to trade among themselves; they represent individual investors or corporate investors. Trade in stocks has been deemed among the most lucrative areas a person can trade ...
General partners have unlimited liability for the debts and obligations while limited partners are liable only for the debts and obligations up to their capital contributions, and they are not personally liable for the debts and obligations of the limited partnership. In 2001 there was a change to the Revised Uniform Limited Partnership Act. Cheeseman (2010) stated, “The limited liability partnership agreement can permit certain or all limited partners a say in how the partnership’s business should be run.” A limited partnership has a tax advantage in that it is a flow-through instrument, meaning all profits and losses flow directly to the individual limited partners. The business itself pays no taxes on the income (Spaulding, 2005-2011).
Laws, Regulations, and Risks
Some of the laws and regulations the partners need to consider are the need for an operating license, health permit, and liquor license. If the business tries to operate without these licenses or permits they take the risk of being shut down. The partners also have to prepare for every day risks such as having a safe environment. If there are TVs hanging they should be installed by professionals and up to code to avoid the risk of TVs falling on customers or employees. The next business scenario that will be examined is two individuals that want to start a business in the medical field. Professional Practice
Akiva and Tara have just completed all educational and experiential requirements to be licensed as obstetricians. They want to open a birth clinic together. They will take out a large loan to finance start-up costs. Akiva and Tara should start a Limited Liability Partnership (LLP) business entity. In an LLP, all partners are limited partners who can only lose their own capital if the business fails. No one is personally liable for the debts and obligations of the partnership over his or her contributions (Cheeseman, p. 274).
The Essay on Commercial Law Rulpa Limited Partner
Commercial Law Seminar General & Limited Partnerships The 1976 Revised Uniform Limited Partnership Act (RULPA) states that two or more persons may form a limited partnership by executing and filing a certificate of limited partnership. Furthermore there must be at least one general and at least one limited partner in order for the Limited partnership to exists. The 1976 Revised Uniform Limited ...
Chessesman (2010) states “many state laws require LLPs to carry a minimum of $1 million of liability insurance that covers negligence, wrongful acts, and misconduct by partners or employees of the LLP.” LLPs are like many other partnerships in that they follow flow-through taxation. All financials are reported on the individual’s tax returns. Laws, Regulations, and Risks
The first thing Akiva and Tara need to do is look at the state regulations as each state has different regulations. The state regulations will list things like definitions, staffing, facility, fire and building codes, and the services that are allowed. A perfect example is that no states allow cesarean sections to be performed in birthing centers. These regulations also provide information about services that are required, policies, procedures, organization, quality assurance, and evaluation (American Association of Birth Centers, 2007).
One of the major risks that Akiva and Tara will face is the possibility of malpractice. They should already be covered with personal liability but should also consider taking out malpractice insurance for proper coverage. Another risk they encounter with opening this business is the possibility of the business failing. They are funding their business by taking out a large loan. This loan is required to be paid back whether the business is successful or not.
The last scenario is a construction scenario that will look at the employment laws and regulations that need to be taken in to consideration when hiring employees. Construction Scenario Mei-Lin is the hiring manager for Surebuild, Inc., a new construction company. She has advertised a position as a jackhammer operator. The position’s description states that the successful applicant must have a high school diploma. The following people apply for the position: Michelle, 35, who appears to be pregnant, is a high school graduate, and was formerly employed as a jackhammer operator; Eric, 55, who is experienced with a jackhammer, but has no high school diploma; Felipe, who is 38, speaks no English, has no high school diploma, but is experienced with a jackhammer; and Nick, 23, a college graduate who is epileptic, and has no experience with a jackhammer.
The Essay on Employment Discrimination Policy
Discrimination in the WorkplaceAbstractOur Company is committed to the principals of Equal Employment Opportunity and to making employment decisions based on merit and value. We are dedicated to conforming with all federal, state, and local laws concerning Equal Employment Opportunities, as well as all laws associated to terms and conditions of occupation. We desire to maintain a work environment ...
Starting in the 1960s, Congress enforcing a set of federal laws that eliminated employment discrimination. These laws were passed to guarantee equal employment opportunity to all employees and job applicants. They have been broadly interpreted by the federal courts, particularly the U.S. Supreme Court (Cheeseman, p. 352).
Title VII of the Civil Rights Act of 1964 was put in to place to eliminate discrimination by race, color, national origin, sex, and religion. Cheeseman (2010) states “Title VII applies to employers with 15 or more employees, all employment agencies, labor unions with 15 or more members, state and local governments and their agencies, and most federal government employment.” Mei-Lin cannot discriminate against Michelle because she is pregnant. In 1978 the Pregnancy Discrimination Act was enacted as an amendment to Title VII.
Mei-Lin could decide to not hire anyone who is younger than 40 years old and that would not be discrimination according to Age Discrimination in Employment Act. This act enables employers to maintain a hiring policy of hiring only workers 40 years of age or older. The Americans with Disabilities Act (ADA) protects Nick from not being hired due to his epilepsy. Mei-Lin would be able to turn down Eric and Felipe because they do not have a high school diploma. The advertisement did not say that jackhammer experience was required so she cannot turn down applicants because they do not have experience. Mei-Lin needs to be careful when considering applicants and how they are turned down. Conclusion
Before starting a business it is important to consider all business entities and the advantages and disadvantages of each. In all business scenarios there are rules, regulations, and risks that need to be considered before starting the business and also while running the business. This paper explored two different types of partnerships and some advantages as to why they should be partnerships. The last scenario explored the different risks with hiring employees and how to avoid discrimination cases. These are all important factors to consider if there is a business just starting or a business that has been up and running for 20 years.
The Essay on The age discrimination in employment act
Part 1625 of the Code of Federal Regulations, Title 29, Chapter XIV is the Age Discrimination in Employment Act (ADEA) specifies that it is unlawful for a covered employer to discriminate in "hiring or in any other way by giving preference because of age between individuals 40 and over." Essentially this act forbids firing, refusing to hire or to promote, or treating an individual differently ...
References
American Association of Birth Centers. (2007).
Birth Center Regulations. Retrieved from http://www.birthcenters.org/open-abc/bc-regs.php Cheeseman, H.R. (2010).
The legal environment of business and online commerce: Business ethics, e-commerce, regulatory, and international issues. (6th ed.) Upper Saddle River, NJ: Pearson Prentice Hall. Spaulding, W. (2005-2011).
The Tax Advantages of Limited Partnerships as Direct Participation Programs (DPPs).
thismatter.com. Retrieved from http://thismatter.com/money/funds/dpp/limited-partnership-taxation.htm
