Business entities laws and regulations

¶ … business could be structured. The bar could be run as a partnership, with Miriam as a silent partner. The partnership agreement can be used to determine the manner in which the proceeds of the business are divided. However, a partnership would also expose the principles to liability associated with the business. Given that they are opening a bar, there is high liability risk, and this type of business has a high failure rate. Thus it is recommended that the three incorporate. There are a few different types of corporations, including limited liability companies (LLCs), S-corporations and standard corporations. An LLC limits the downside risk to the owner of the firm. The LLC structure will also provide managerial flexibility and flow-through taxation. The LLC, however, is not recognized by the federal government for tax purposes, which means that taxes will still be dealt with as a corporation, partnership or sole proprietor. An S-corporation pass income to the shareholders in the same way that a partnership would. The ownership structure would allow Miriam to take a weighted share of the profits. However, any flow-through structure makes it more difficult to plow back earnings into the business as it does not allow for retained earnings. A corporation is a separate tax-paying entity, and has limited liability risk to the owners. It is, however, a more complicated structure to set up.

In this case, the partners will need to decide which of these structures best fits their needs. An LLC that is taxed as a partnership would likely be best in this situation, as it provides downside liability risk protection and it would also allow the partners to flow their income from the venture through. This way, all three parties would be taxed the same on the income. The corporation structure has cost disadvantages associated with set-up and double taxation, and it is unlikely that the three partners will need to utilize the benefits of that structure.

The bar business is going to be subject to a wide range of laws. In addition to IRS tax policy, there are laws with respect to food handling, employees and the service of alcohol. There are some federal laws pertaining to these topics but many of the laws are at the state, county or municipal level and the parties would need to investigate these with their local authorities.

There are a number of risks associated with this business. The first is the risk to the capital invested, as the bar business has a high failure rate. The second set of risks comprises those risks associated with food and alcohol service. Foodborne illness is a considerable risk and improper alcohol service could result in harm to a customer and loss of the bar's liquor license. There are also risks involved with hiring staff and risks related to fire and electrical hazards. This business can expect to have a fairly high insurance bill to cover the wide range of risks to which it is subject. However, it would not be able to insure against the risk of the business failing due to lack of demand. Miriam would also want to minimize her downside risk, since she is investing the money but is not going to take an active role in management. This would be arranged in the contract with Lou and Jose, as to at what point she would pull the plug on the business. Thus, there is risk associated with the business arrangement in general, and each of the partners should ensure that his or her interest is protected in the event that things do not work out as well as hoped.

The extermination business should be a corporation. Initially, a basic one-person extermination business could use the sole proprietorship structure, but Frank's ambition demands the flexibility and professionalism of a corporation. The corporate structure will allow Frank to access capital markets and/or attract investors, while simultaneously allowing him to remain in control of the company. Only the corporation structure offers Frank this flexibility and limited downside risk. Corporations are subject to double taxation, but Frank can use the structure to pay his investors when he needs to. This business will be subject to EPA regulations with respect to the pesticides and insecticides that are used, and there may be city or state licensing involved. Otherwise, only the IRS and the laws with respect to incorporation need be considered. There are significant risks for Frank, most of them financial as the cost of building out such a business is going to be tremendous. There are also risks associated with the use of the poisons in the business, and these will also need to be addressed.

The construction company must bear in mind a number of laws with respect to this hiring decision. The least challenging is Nick. While the company cannot discriminate against him because of his epilepsy unless it had reason to believe that he was going to be unable to perform the job safely, he is not qualified by virtue of his lack of experience, so he would not be hired. If Surebuild has fewer than 15 employees, it would also be exempt from the American Disability Act.

Michelle cannot be discriminated against because of her apparent pregnancy, as per the Pregnancy Discrimination Act. Michelle is otherwise qualified for the job. In her situation, however, she may be unable to perform the job because of the risk to the health of her and her baby. Mei-Lin will need to tread carefully, but if she has reason to believe that Michelle cannot physically perform the task, she should not make an offer to Michelle.

Felipe does not speak English. Mei-Lin could refuse to hire him because he does not meet the basic requirements of the job. If the site is generally a Spanish-speaking site, he could possibly be hired. However, there are safety considerations that must be taken into account if the site language is English. Felipe could be unable to perform the job safely until he has better command of the English language.