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Business Entities, Laws and Regulation Paper

Essay by   •  May 23, 2012  •  Research Paper  •  919 Words (4 Pages)  •  1,278 Views

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Abstract

The following scenarios are something to consider when starting a business. Each of these businesses should expect to include information regarding business entities, laws, and regulations that are suited to their line of business, while still maintaining employment regulations as a decision making factor as well. Consider the following scenarios and the legal variations that can occur in the start-up of a business and what the determining factors are.

Extermination Business: Frank is a wealthy investor who plans to open a chain of exterminating businesses across the United States.

(Introduction)

Appropriate Business Entity

Frank's extermination business is more suited for incorporation, Professional Practice should consider the LLP option, "A special form of partnership in which all partners are limited partners, and there are no general partners. For their business entity," (Cheeseman, 2010, p. 517). Surebuild, Inc. should consider the option of an LLC, "An unincorporated business entity that combines the most favorable attributes of general partnerships, limited partnerships, and corporations," (Cheeseman, 2010, p. 517). The extermination business should consider a corporation because Frank will be able to franchise his business into other profiting expansions, "An arrangement that is established when one party (the franchisor) licenses another party (the franchisee) to use the franchisor's trade name, trademarks, commercial symbols, patents, copyrights, and other property in the distribution and selling," (Cheeseman, 2010, p. 515). Professional Practice should consider the LLP option because it reduces their personal liability and cutting financial start-up costs. Surebuild, Inc. is more suited for an LLC option because they too can limit their overall personal liabilities within the company and protect themselves from financial overhead costs. All three of these options can be beneficial or create disadvantages if not set up in the appropriate legal manner or prohibits protection under the law, whether it is from a personal or professional perspective. The law has its limitations but knowing the regulations and employment laws can give a new business perspective for what they can expect, legally speaking.

Laws and Regulations

Choosing an appropriate business entity requires the knowledge and understanding of what the organization, as well as the individual professionally responsible for the organization, should be aware of when deciding on the appropriate legal venue for a business entity. Considerations should include but not be limited to the basic laws and employment regulations. With the entities that involve some sort of partnership, these organizations are able to make decisions together while also avoiding federal income taxes and instead reporting the accumulated profits in the decided shares, separately on their own income tax returns (Cheeseman, 2010). This offers certain personal protections so long as the members avoid piercing the corporate veil, which can result in paying damages caused by unprofessional misguidance while doing business. They ultimately share in profits, management

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