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Business Entities, Laws, and Regulations

Essay by   •  September 9, 2012  •  Research Paper  •  931 Words (4 Pages)  •  1,612 Views

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Lou, Jose, and Miriam have partnered up to open a combination sports bar and restaurant. This venture involves Lou and Jose controlling the day-to-day operations of the business; whereas Miriam provides the necessary startup capital, and considered a silent partner. Even though Miriam has invested heavily in the project, she is content to remain in the background as part owner and receive a share of the proceeds attained; prima facie (Cheeseman, (2010), p. 254). Simple to form, a general partnership to accommodate each party's expectations requires meeting certain criteria. This style of partnership consists of two or more co-owners, which conduct a for profit business.

Taxation for a general partnership has benefits as well. Identified as "flow-through taxation," meaning partnerships pay no federal taxes. In its place, the individual partners declare his or her share of profit or loss on his or her personal income tax returns. Government tax officials prefer this so they can monitor whether each partner is reporting income or loss correctly (Cheeseman, (2010), p. 255).

Lou and Jose have unlimited liability in this form of partnership because they manage the restaurants daily activities whereas Miriam only investing money to start the business and considered a limited partner receives limited liability (Cheeseman, (2010), p. 261).

Opening a bar restaurant requires the owners to register with the local and state branches of government to secure a liquor license needed to serve alcohol to customers. The license placed behind the bar evidences that the sports bar have permission to sell alcohol to qualified patrons. The restaurant must operate within health department guideline or code to provide meals to the paying public. Furnishing sports entertainment to customers via direct cable access contracted through a local service provider.

A written partnership agreement discerns the level of liability for each partner. This prevents sole responsibility for incorrect or dishonest business practices or scapegoating to avoid culpability, which reduces the risk of impropriety because every partner is liable. Miriam assumes the largest percentage of chance if the business falters.

As licensed obstetricians, Akiva and Tara plan to open a birth clinic under a general partnership. This form of partnership offers both parties control over business operations; meaning that one party cannot impose change without the consent of the other party.

Both parties have unlimited liability for debts and daily business decisions, as well, if the business is unsuccessful both parties are liable to repay the bank loan and other expenses incurred. Filing income taxes for a general partnership assess the about of profit generated by the business and disseminated between partners by percentage accountable and added to their personal income tax for that year.

Laws associated with opening

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