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Business entities, laws, and Regulations
Business entities, laws and regulations
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Restaurant/Bar Scenario
Business Entity, Control, Taxation and Liability
As per the scenario, Lou and Jose plan to open a sports bar and restaurant, the best business
entity choice for this restaurant and sports bar is the partnership firm because Lou, Jose and
Miriam are the three persons who want to start the business in return for a percentage of
ownership. Lou and Jose will take care of business operations and Miriam will invest money.
Miriam will allow to Lou and Jose to keep control on business activities by sharing profit with
them, so it would be considered as the partnership firm (The General Partnership, 2010).
In a partnership firm the all the business decisions are taken by the conformance of all the
partners. In this scenario, Lou and Jose are the main controllers and their partnership is general
partnership but Miriam would not have any control because he is giving money in to earn profits
only (Liability for partnership debts, 2010). According to the taxation policy of USA, in a
partnership firm the tax will not incur on profit before distributing to the partners. In partnership
business entity, the tax would be paid by the individual partners after distributing the profit
among them (The General Partnership, 2010).
According to the common law, in this partnership business entity, the liability of Lou and
Jose is unlimited for the business organization because they will manage all the activities and
plans of the restaurant but the liability of Miriam is limited because he is investing only capital to
start the business. All the partners in this entity are protected from the unlawful and wrong acts
(Murray, n.d.).
Laws and Regulations to Start a Restaurant or Sports Bar
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In order to start this restaurant or sports bar as a partnership firm, there are some law and
legal regulations that should be considered by the partners before making the contracts of
partnership and starting the business, which are as follow:
 It is necessary for the business owner to register for a liquor license with the local and state
government to serve the alcohol and other drinks to the customers. It is necessary for the bar
owner to hang the liquor license behind the bar to shows that the sports bar have the legal
permission of government to serve alcohol and liquor drink (The General Partnership, 2010).
 It is essential to evaluate the various regulations in the partnership law to control the behavior
of the partners and describe their liability and responsibility towards the society and government
(The General Partnership, 2010).
 The partnership agreement of the business concern and the legal responsibilities of the partners
should be well written and permitted by the government, so that not a single partner will face any
kind of wrong and illegal act (Adelson, 2010).
Risk regarding Business
There are some risks that should be evaluated before starting business in partnership. The main
risk through which the business must protect itself is the risk of losing money and facing loss in
the business. As the capital investor in the business is Miriam, he would have the biggest risk to
face loss in business (The General Partnership, 2010). It is necessary for him to make a contract
with Lou and Jose, in which they all would bear equal loss and profit. If the judgment of partner
is not good and he would not follow the liability towards the business, the responsible person
would tolerate all the loss (Should You Have a Partner? 2010).
Professional Practice Scenario
Business entities, laws, and Regulations
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Business Entity, Control, Taxation and Liability
As per the scenario, Akiva and Tara want to open a clinic to continue their professional
practice, which they will open as under the legal regulations of general partnership. Under this
partnership both the partner have the control over the business operation of this clinic. They
should have to take decisions y discussing with each other (Hobday, 2010).
Under this type of partnership, both the partners have unlimited liability for the debts and
other decisions of clinic. According to the income tax regulations, it is the responsibility of both
partners to pay tax as a separate return. It is the responsibility of Akiva and Tara to report about
her pro-rata share of the profit and loss that they gained in business in their personal tax return
(The General Partnership, 2010).
Under the unlimited liability, if the clinic would become fail and bankrupt, it is the
liability of both the partners Akiva and Tara to pay the loan and bank will seized their personal
assets. As Akiva and Tara have taken a loan to start the professional practice, both are
responsible to pay the loan of bank (Liability for partnership debts, 2010).
Laws and Regulations to Start a Professional Practices
In order to start the professional practices as obstetricians, there are various laws and
regulations that should be considers by both Akiva and Tara before starting a clinic. The main
law is regarding the license and permission policy to open a clinic that should be taken by the
medical council and state government before opening the clinic (Crausman, n.d.). The owner
should have the experience in a particular field before starting their private clinic and it is
necessary for the clinic to serve with ethical practices to the client. The professional expertise
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should have the ability to maintain suitable level of knowledge and skills (Salaman, 2002).
Another regulation in this concern is based on the confidentiality. The professional should
remember that the private information of clients should not be leaked by anyone. In this concern
the owner of the clinic has the liability (Crausman, n.d.).
Risk regarding Business
In order to start a professional clinic the main risk is associated with the experience of
professionals in the childbirth field and take-care of mothers. The potential risk in this area is the
malpractice of professional to earn gain more money and increase the profitability (Crausman,
n.d.). Adverse treatment of patients would be harmful and risky for the success clinic and would
harm the professional practice of Akiva and Tara. They should have the knowledge they will not
do malpractices otherwise their license will be canceled by the medical board (Crausman, n.d.).
Thus, before starting a professional clinic both the partner should evaluate the various pros and
cons of the partnership and what are the laws and regulations are associated with this business.
Construction Scenario
Business Entity, Control, Taxation and Liability
According to the scenario, the best suitable business entity for this construction company,
Surebuild Inc. is the corporation. It is a construction company which has a legal entity (Brown,
2003). It has its own rules and regulations, business policies and rights to do business in the
industry that based on the corporate law.
Although, in a business corporation, the CEO and president of the organization has the
control and authority to take any decision but decision regarding the different departments can be
controlled by the different authorities, who are the supervisors and manager, general managers in
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the particular department (Dignam & Lowry, 2006). According to the given scenario, the
responsibility of recruiting a jackhammer is controlled by Mei-Lin, who is the hiring manager in
the company.
The taxation policy in a business corporation is quite complicated. In this the corporate
tax of tax of the construction company should charge as the corporate tax rate, where as the
dividends of the shareholders are taxed as their separate rate (Corporation Business Tax:
Overview, 2008). Corporations in USA follow the double taxation policy.
In the modern business organization, the most important feature of a company is its
limited liability. If the business corporation become fail and bankrupt, shareholder lose their
money and employee lose their jobs but they all are not liable to owe the debts of the company to
the creditors (Brown, 2003).
Laws and Regulations to Start a Business Corporation
In order to start a business corporation in a particular country, firstly the business management
should evaluate the way to enter in the market and take permission or license by the state
government and evaluate a mode of entry such as partnership, merger, franchisee, subsidiary, etc.
The company should have a legal presence and requires documents to establish itself as a
business entity. The rule, regulations and policies of the business firm should be based on the
business and common law of the particular state (Salaman, 2002). The company should also
follow the immigration law of employers and employees and federal and company law (Dignam.
& Lowry, 2006).
Risk regarding Business
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One of the most important business risks to start a business organization is related to its
entity. The company should have sufficient resources to achieve the objective and maintain its
profitability. The firm should have the right of intellectual property, to maintain its entity in the
industry. With the construction business, the most important risk is the implementation of
technologies. If the company does not have effective technologies to and instruments to construct
any building, it would be risky for the success of the business (Dignam & Lowry, 2006).
Employment Law
According to this scenario, the company wants to recruit the person who has both the
degree and experiences. In this scenario the firm should comply with the equal employment
opportunity acct to make decision regarding the selection of an employee. According to the
given criteria, the company should select Michelle (high school diploma holder but pregnant)
and Nick (college graduate but epileptic). The company cannot discriminate these candidates
because of the pregnancy and disease. It is the ethical responsibility of the firm to serve them
health facilities after their selection to follow the employment and labor law and behave in an
ethical manner (Bratton & Gold, 2001).
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References
Adelson, B.J. (2010). Should You Have a Partner? Retrieved from
http://www.myownbusiness.org/s4/
Bratton, J. & Gold, J. (2001). Human Resource Management: Theory and Practice (2nd Edition).
Routledge.
Brown, B. (2003). The History of the Corporation. Retrieved from
http://www.astonisher.com/archives/corporation/corporation_intro.html
Corporation Business Tax: Overview (2008, November 11). Retrieved from
http://www.state.nj.us/treasury/taxation/corp_over.shtml
Crausman, R.S. (n.d.). Board of Medical Licensure and Discipline. Retrieved
from http://www.health.ri.gov/hsr/bmld/
Dignam, A. & Lowry, J. (2006). Company Law. Oxford University Press.
Hobday, G. (2010). What Type of Business Organization is Best for You? Retrieved from
http://www.myownbusiness.org/s4/
Liability for partnership debts (2010). Retrieved from
http://www.rurallaw.org.au/handbook/xml/ch06s09s03.php
Murray, J. (n.d.). Limited Liability Partnership (LLP). Retrieved from
http://biztaxlaw.about.com/od/glossaryl/g/limliabpart.htm
Salaman, G. (2002). Decision Making for Business: A Reader (eds.). Published by SAGE.