Business_Enities_Law_Paper

Business Entities, Laws, and Regulations Paper The two businesses are Extermination and Professional practice. In which organizational structure presents the best option for each business with contemplation for control, taxation, and liability issues. The laws, regulations, and risks any business must face. The construction scenario will include a discussion of a hypothetical situation in which a hiring manager must choose an applicant while considering laws, regulations, and the risks opposing which the business must support itself when making the decision. Professional Practice Akiva and Tara are newly license as obstetricians and want to open a birth clinic together. Both will need to take out a huge loan to finance their start-up amounts. Akiva and Tara would be best to create 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. Members of an LLP are also not personally liable for the malpractice of one partner and states require LLP to carry substantial liability insurance in exchange 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 insolvent (Cheeseman, 2010). Forming an LLP ensures that Akiva and Tara retain 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 tax for the business profits 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 operate. If they choose to conduct 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 combination of liability protection, tax benefits, and control of their business (Cheeseman, 2010). Extermination Business Frank is a wealthy investor agenda is to open a chain of exterminating businesses across the United States. Frank should organize his business as a franchise. Franchising offers benefits of the franchisor including being able to expand into multiple markets and retaining control over any trademarks, patents, copyrights, and trade secrets used in the business. Franchisors may also collect a percentage of the profits from their franchisees in the form of royalties. Franchisees benefit from acquiring access to the franchisor’s knowledge and resources. Franchisees will not have to pay the costs associated 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 independent contractor and generally speaking, neither party is responsible for the torts or contracts of the other (Cheeseman, 2010). Organizing his business as a franchise gives Frank control 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 business will depend on how the franchise company has organization. If Frank incorporates his business, the company will be tax as will the dividends 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 variety of markets using franchise agreements (Cheeseman, 2010). Employment Scenario Mei-Lin has advertised for a position for a jackhammer operator and specifies that the lucrative applicant must have a high school diploma. She has received several applications and must make a hiring decision. To remain compliant with the law, Mei-Lin must consider several factors when choosing an applicant. She cannot, for example, consider factors such as race, color, age, or gender when making her decision. The company’s requirement for a high school diploma is not discriminatory because it is a reasonable requirement for the position. This means that for no other reason, 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 fearing a claim of discrimination based on Felipe’s language barrier or Erik’s age. 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 hire Michelle on this alone (United States 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. The employer may also not require a physical examination as a condition of employment unless all job offers are equally condition. Nick must be able to perform the essential requirements of the job with reasonable accommodation. In this case, Mei-Lin should hire Michelle because manager has the required high school diploma and experience as a jackhammer operator. Michelle’s apparent pregnancy cannot reflect. Although Nick does have a high school diploma has no experience operating a jackhammer. Should Nick 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 justify her decision based on Michelle’s prior work experience (United States Equal Employment Opportunity Commission, 2008). Conclusion To decide how to organize a business, factors such as control, taxation, and liability are important considerations. Professionals such as doctors, lawyers and accountants are best to serve by limited liability partnerships that protect members from personal liability beyond their initial capital contributions. Companies seeking to operate 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. Available from University of Phoenix Ebook collection U.S. Equal Employment Opportunity Commission. (2008). Facts about pregnancy discrimination. Retrieved from http://www.eeoc.gov/facts/fs-preg.html