Business Law Essay

Submitted By brianc10982
Words: 3057
Pages: 13

LIT1: Legal Issues for Business Organizations

When evaluating your current situation, I thought it was best to just lay out to you all of your options, with the pros and cons to each. After detailing each specific type of corporation option, I will provide you with my final analysis which will be included in the memorandum that follows all of the given information. If you have any questions or comments for me, please just reply to the memo and we will schedule a sit down talk, where we can finalize any change you would like to make, as well as provide you with the paperwork you will need.
Sole proprietorship A sole proprietorship presents a business where there is no direct distinction between the business and the owner in terms of legality. A sole proprietorship is, in most cases, is a company that is owned, ran, and overseen by one individual. The owner would reap all the reward, but also deal with all loses. He or she would receive all profits, minus those that are taxable, and they would also be responsible for any debt or losses that the company accrues. Every asset of the business is owned by the proprietor and all debts of the business are the proprietor's, therefore, the owner has no less liability than if they were acting as an individual instead of as a business. When becoming a sole proprietor, all business losses or income must be reported on your personal income taxes. It is not necessary to file taxes related to the business separately. It is a "sole" proprietorship in contrast with partnerships. It can be said that a person who owns a business on their own, is entitled to income that said business earns. Another way to look at it is, although a single business owner may have several employees working on his behalf, it is still controlled solely by that owner. The option of naming his or her business, something other than their legal name, is totally the choice of the sole proprietor. In many jurisdictions there are rules to enable the true owner of a business name to be ascertained. Different countries have different regulations in regards to the filing of a business name. In the United States the requirement is to file a statement with the local authorities that you are doing work. In the United Kingdom the requirements are simpler as the proprietor's name must be displayed on business emails, cards, and at the business location. One negative to a sole proprietorship is the possible longevity of the business. Due to the fact that a sole proprietorship is ran by a single person, there is always the chance of illness or other tragic events that can derail the business. Sometimes, with no one to turn to, this can cripple the company and shut it down.
General partnership Partnerships have certain similarities that relate to how the relationship transpires in the outside world, and how the relationship between partners transpires in regards to the business itself. In terms of the business aspect of the relationship, rules and guidelines can be set to make sure that relationships stay intact, no matter what the circumstances. Outside of the business anything can happen, and the agreement between the partners does not apply. Business assets are always owned on behalf of other investing partners. These partners are each responsible for debts and taxes to name a couple. They are also each personally responsible for tortuous liability. An example of this would be if for any reason the partnership would default on a loan, or on a payment to a creditor, the partners’ personal assets couple be in trouble. They would be subject to liquidation to account for payments to the creditors. In most cases, any profit that the company earns, are shared among all partners, and in most instances they are distributed evenly. Normally in a “general partnership” there is some sort of agreement among the partners. This agreement will almost always explain how profits are distributed, and in…