Business Entities Laws and Regulations Paper

Business Entities, Laws, And Regulations Paper

Business Entities, Laws, and Regulations

Business Entities, Laws, and Regulations

Two start-up businesses in different industries are beginning and an established company with labor issues are the focus of this paper. For the two start-ups, a sports bar and a birth clinic, a case needs to be made for the type of business entity they should each use. The established company is a construction company whose business entity must be identified and employment law pertaining to the scenario will be discussed.

For each business, identification of the best business entity for the given situation needs to be accomplished first. The decision of the type of business entity will take into consideration control, taxation, and liability issues. Review of the laws and regulations that each ownership group must consider and identification of risks that the businesses should protect against will be discussed. Review of the construction company’s business structure and how it affects control, taxation, and liability issues along with how employment law impacts the current scenario is focused on.

In examining the sports bar identifying the ownership structure and control issues will determine of the proper business entity be used. Below is the information provided for this business:

“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” (University of Phoenix, 2010, p.14).

There are three partners, two of them will be active in the business the third will not but provides the capital to get the business up and running. A limited partnership (LP) is the proper entity for the sports bar in this instance. In this situation Lou and Jose would be the general partners and Miriam would be a limited partner. The primary reasoning for an LP is that Miriam is shielded from personal liability for any debts, negligence, or torts incurred or created by her partners beyond the limit of her investment. Lou and Jose however would have unlimited liability. Profits and losses for the LP would be reported on the individual taxes of the partners. This form of taxation is often referred to as “flow-through” (Cheeseman, 2010, p. 255). In the case that the business requires additional capital beyond what the partners put in initially the lender may require that Miriam personally guarantee the loan. This would make Miriam liable for that debt should the LP default on it (Cheeseman, 2010).

The law that covers limited partnerships is the Revised Uniform Limited Partnership Act (RULPA)