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    Business Entities

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    mmsapaige
    Akiva and Tara should form a limited liability partnership (LLP) for their obstetrics clinic to gain liability protection and maintain control while benefiting from pass-through taxation. Frank should establish a franchise for his exterminating business chain to control trademarks/copyrights across markets through franchise agreements. Mei-Lin must choose a job applicant for a jackhammer position without discriminating based on protected class; she should hire Michelle, who meets qualifications, over Nick, who lacks experience.

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    Business Entities

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    mmsapaige
    2K views2 pages
    Akiva and Tara should form a limited liability partnership (LLP) for their obstetrics clinic to gain liability protection and maintain control while benefiting from pass-through taxation. Frank should establish a franchise for his exterminating business chain to control trademarks/copyrights across markets through franchise agreements. Mei-Lin must choose a job applicant for a jackhammer position without discriminating based on protected class; she should hire Michelle, who meets qualifications, over Nick, who lacks experience.

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    Akiva and Tara should form a limited liability partnership (LLP) for their obstetrics clinic to gain liability protection and maintain control while benefiting from pass-through taxation. Frank should establish a franchise for his exterminating business chain to control trademarks/copyrights across markets through franchise agreements. Mei-Lin must choose a job applicant for a jackhammer position without discriminating based on protected class; she should hire Michelle, who meets qualifications, over Nick, who lacks experience.

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    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    2K views2 pages

    Business Entities

    Uploaded by

    mmsapaige
    Akiva and Tara should form a limited liability partnership (LLP) for their obstetrics clinic to gain liability protection and maintain control while benefiting from pass-through taxation. Frank should establish a franchise for his exterminating business chain to control trademarks/copyrights across markets through franchise agreements. Mei-Lin must choose a job applicant for a jackhammer position without discriminating based on protected class; she should hire Michelle, who meets qualifications, over Nick, who lacks experience.

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    of 2

    Business Entities, Laws, and Regulations Paper Sasha Lewis University of Phoenix BUS 415

    August 2, 2010 Carl Jolivette Business Entities, Laws, and Regulations Paper The following
    paper will include a discussion of two imaginary businesses and which organizational
    structure presents the best choice for each business with consideration for control,
    taxation, and liability issues as well as the laws, regulations, and risks each business must
    face. The paper will also consist of a discussion of a imaginary situation in which a hiring
    manager must choose an candidate while considering laws, regulations, and the risks
    against which the business must protect itself when making the judgment. Akiva and Tara
    are newly licensed as obstetricians and want to open a birth clinic together. The will need
    to take out a large loan to finance their start-up costs. Akiva and Tara would be best
    served by creating a limited liability partnership (LLP) to organize their business. By forming
    the LLP, the partners protect themselves from liability beyond their initial capital
    contribution should the partnership fail or face a lawsuit (Cheeseman, 2010). Members of an
    LLP are also not individually liable for the malpractice of one partner and states necessitate
    LLPs to carry substantial liability insurance in trade for this limited liability. The limited
    liability protects Akiva and Tara from being held personally liable for the loan they will take
    out should the business become in debt. Forming an LLP ensures that Akiva and Tara
    maintain control of their business because they are the only shareholders. For tax purposes,
    an LLP is not taxed as a separate entity so Akiva and Tara will only pay taxes for the
    business earnings on their individual tax returns. To form their LLP, Akiva and Tara will need
    to write and file articles of partnership in the state in which they wish to function
    (Cheeseman). If they desire to carry out business in another state, they will first need to
    register as a foreign LLP with that state. Organizing their business as a limited liability
    partnership offers Akiva and Tara the best blend of liability protection, tax benefits, and
    control of their business. Frank is a wealthy investor who plans to open a chain of
    exterminating businesses across the United States. Frank should organize his business as a
    franchise. Franchising offers benefits to the franchisor including being able to develop into
    multiple markets and maintaining control over any trademarks, patents, copyrights, and
    trade secrets used in the company. Franchisors may also collect a percentage of the profits
    from their franchisees in the form of payments. Franchisees benefit from having access to
    the franchisor's knowledge and resources (Cheeseman, 2010). They also do not have to pay
    the expenses connected with establishing trademarks, copyrights, and patents. Franchisors
    and franchisees are separate legal entities for purposes of taxation and liability, at least in
    most cases. This means that the relationship between franchisor and franchisee is one of an
    self-regulating contractor and, generally speaking, neither party is responsible for the torts
    or contracts of the other (Cheeseman). Organizing his business as a franchise gives Frank
    power over who he will license as a franchisee, the fee he will charge for the franchise
    agreement, and the markets in which his company will operate. The taxation of the
    company will depend on how the franchise company is organized. If Frank incorporates his
    business, the company will be taxed as will the payments paid to shareholders. If Frank
    chooses to form an LLC as the foundation for his franchise, the company will not be taxed
    as a separate entity but its members must report profits and losses on their individual tax
    returns. For Frank's purposes, forming a chain-style franchise of exterminating businesses
    throughout the country provides the best way to present a uniform service and product to
    consumers, maintain control of trademarks and copyrights, and to operate in a diversity of
    markets using franchise agreements. Mei-Lin has advertised for a position for a jackhammer
    worker and specifies that the successful interviewee must have a high school diploma. She
    has received more than a few applications and must make a hiring choice. To remain
    amenable with the law, Mei-Lin must consider several factors when choosing an applicant.
    She cannot, for example, deem factors such as race, color, age, or gender when making her
    choice. The company's requirement for a high school diploma is not discriminatory because
    it is a practical prerequisite for the position. This means that for no other grounds, Eric and
    Felipe are not eligible for the position because they are not high school graduates. Mei-Lin
    can exclude them for the position without apprehension a claim of prejudice based on Erik's
    age or Felipe's language obstacle. This leaves Michelle and Nick as candidates. Mei-Lin
    notices that Michelle appears to be pregnant; according to the Pregnancy Discrimination Act
    of 1978, Mei-Lin cannot base a decision not to employ Michelle on this only (U.S. Equal
    Employment Opportunity Commission, 2008). Nick is an epileptic and is therefore protected
    under the Americans with Disabilities Act (ADA). Mei-Lin may not base a hiring decision on
    Nick's disability. She may also not require a physical examination as a condition of
    employment unless all job offers are equally trained (Cheeseman, 2010). Nick must be able
    to perform the fundamental requirements of the job with reasonable accommodation. In this
    case, Mei-Lin should hire Michelle because she has the necessary high school diploma and
    prior experience as a jackhammer operator. Michelle's apparent pregnancy cannot be
    considered. Although Nick does have a high school diploma, he has no experience operating
    a jackhammer. Should he try to file a claim with the Equal Employment Opportunity
    Commission for discrimination based on a violation of Title I of the ADA, Mei-Lin can defend
    her decision based on Michelle's prior work experience. When deciding how best to organize
    a business, factors such as control, taxation, and liability are essential matters.
    Professionals such as doctors, lawyers and accountants are best served by limited liability
    partnerships that protect members from personal liability beyond their initial capital
    offerings. Businesses seeking to work a chain of locations providing uniform services can set
    up as a franchise and license others to operate under their trade names. Employment
    decisions are complex and must be made in a manner that does not violate civil rights and
    other protections afforded under the law. References Cheeseman, H. (2010). The legal
    environment of business and online commerce.

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