This website uses cookies to ensure you have the best experience. Learn more

The Legal Forms Of Business Essay

1445 words - 6 pages


Entrepreneurship is one of the cornerstones of the American way of doing business. Many businesses are organized each day. Business owners are fortunate that there is a form of business for just about every entrepreneurial need.

Legal Forms of Business
The various forms of business organization are established by state law. Therefore, businesses are formed according to rules in the state in which they are organized. An entrepreneur is the person or persons who form a business and the type of business they form is dependent upon their particular needs.
Sole Proprietorship
The simplest form of business organization is the sole ...view middle of the document...

The partnership agreement is backed by law. All partners are personally liable for the debts and business obligations of the partnership. This liability is unlimited. A partnership can operate under a fictitious name or the names of one or more of the partners. Like a sole proprietorship, a partnership is not taxed. The profits and losses from a partnership are included in the tax returns of each partner in a process called flow-through taxation. The most essential part of a partnership is that all partners share in the profits.
Three friends are drinking at a bar one night. They are unhappy with the service they receive and decide to open their own bar. Because a partnership can be formed orally, the partnership immediately exists. They begin drawing up their partnership agreement and have it registered with the state. Once they receive the proper licensing, they open “The Three Amigos” bar and grill. Because there is not much competition in the area, they go on to be very successful, sharing the profits of their business. They decide that they will stay together forever since the dissolution of a partnership can be time consuming and messy.
Limited Liability Partnership
The most beneficial aspect of a limited liability partnership is that the partners have limited liability for the debts and obligations of the partners so there is some protection for the partners’ personal belongings. Partners are only liable for the debts and obligations of the partnership up to the amount of the respective partner’s individual initial contribution. In most other ways, a limited liability partnership is very similar to a general partnership. Partners are taxed only on the income that is passed through the business to them.
Jeff and Dan are two medical school students at the top of their class in their respective fields of medicine. Both graduate with honors and successfully complete their residencies. While they are celebrating, their parents surprise them with a large cash gift to be used to open a medical office. After careful consideration, they decide to open a limited liability partnership. This is the best option for them because they will share the profits and only be liable for business debts up to the amount of their contributions. They will not be required to file corporate taxes and the IRS will tax them as sole proprietors. Dan does not handle the pressure of a new business well and begins frequenting the establishment owned by the three amigos down the street. Jeff is relieved that they decided on a limited liability partnership so that in the event Dan comes to work intoxicated and is negligent in treating one of the patients, he will not be held responsible.
Limited Liability Company
Both the limited liability partnership and the limited liability company share some aspects of a corporation and some other differences depend upon the state in which the business operates. Both provide legal protection for the...

Other Papers Like The Legal Forms of Business

Forms Of Business Essay

987 words - 4 pages Forms of Business Kimberly Smith FIN231_1 February 14, 2016 Instructor McAndrew Forms of Business There are at least five different forms of business. They are proprietorship, partnership, corporation, limited liability company, and cooperative. The three major forms of business are proprietorship, partnership, and corporation. With proprietorship (also known as sole proprietorship), the business is only owned by one person. This

Forms of Business Essay

1810 words - 8 pages carried on within other states. Also, LLC codes within a given state regulate the LLC; and these codes are illustrated in the Uniform Limited Liability Company Act (ULLCA). Unlike the previous mentioned forms of business, an individual who creates their company under and LLC is considered a legal person or their own legal entity. A LLC has the rights to taxation elect to be taxed as a partnership (using the “flow through” method which is most

Forms of Business Ownership

929 words - 4 pages Sherry Munden BUS 280 YD2 Forms of Business Ownership Sole Proprietorship Pros: The easiest way to start a business, you decide what you want your business to be, buy whatever equipment is needed along with leasing a building and getting permits. If the time were to come that you no longer to be in business, you just simply stop because there is no one else that has a stake in the business. You get to keep the profit that the business

The Legal Environment of Business

1956 words - 8 pages properly citing the source of the work will be considered plagiarism and will result in an unsatisfactory grade for the work submitted or for the entire course, and may result in academic dismissal. | | SKS-7000-8 | Gillian Silver | | | Doc. Comprehensive Strategic Knowledge Studies | #5 The Legal Environment of Business | | | <Add Learner comments here&gt

Overview Of Accounting – Business Forms

1599 words - 7 pages This paper is presented to a group of small business owners with no knowledge of accounting or finance. Many small businesses are organized in the form of a sole proprietorship or partnership but these forms of business carry the risk of unlimited, personal and legal liability to the owners. For this reason many small businesses take the path of forming an "S-type" corporation that provides the benefits of a corporation for small firms with up

Review of the Legal Environment of Business

1473 words - 6 pages Review of the Legal Environment of Business This paper is written as an informational document for business executives on the economic and legal factors that affect company transitions from private to public ownership. Mason (2011) stated there are three top reasons that business entities transition from privately owned to publically owned are as follows: (1) Boatloads of cash. (2) Brand awareness. (3) Playing with the big dogs. When a company

Legal Implications of Business

1271 words - 6 pages breach the contract and SSC could sue him. 4. Should Peter hire an attorney? How does he select the right one? Yes, Peter should hire an attorney in order to cover all the legal aspects of starting a new business. Even though, there are several published sources of legal information where he can find answers, some legal guidance it is necessary because this information can be complicated and confusing. Making a mistake can result costly to

Legal Environments Of Business

1218 words - 5 pages Legal Environment of Business 1 Chapter 1, question 4 The difference between statutory law and common law is that statutory law is a written law where common laws are based on any prior court decisions and are legal binding. For statutory laws the government, state, and local agencies issue written statutes and regulations which eventually become part of statutory law, as for common law it is prior case decisions and rulings that are followed

Legal Environment of Business

2623 words - 11 pages INTERNATIONAL LEGAL AND ETHICAL ISSUES IN BUSINESS Legal Environment of Business Instructor: Leslie Dunn By: Janet Hutchins American Intercontinental University Abstract This paper is concerning ethical issues faced by an employee who while working for her first corporate job right out of college has started to lose her idealism after being employed for only 4 months. She has assisted company executives here in the U.S. and in many

The Legal, Social, and Econimc Environment of a Business

608 words - 3 pages really like the help I am receiving and have received thus far from AIU on-line. Response to (legal, social, economic): Bolander states "A business operates within a legal framework that, for the most part, works. This legal framework has a long history and many reams of laws and regulations that will make your head spin. At some point, most companies will have to deal with some sort of legal issue related to their business. Don’t be afraid of

Forms of Leadership in the Military

613 words - 3 pages Leadership I have been in the military for six years, and throughout my short career I have seen many forms of leadership. I have now been directed to explain my interpretation of the concept of leadership and to include my opinion of the subject. I believe leadership comes in many forms; I also believe the attributes of leadership are endowed to some more than others. Not everyone is born with the skills of a leader; some leaders are created

Related Essays

Legal Forms Of Business Essay

1118 words - 5 pages LEGAL FORMS OF BUSINESS Legal Forms of Business Law/531 April 12, 2012 Robert Payne Legal Forms of Business Choosing the proper business organization structure is one of the most important decisions that a business owner must make. The type of organization will determine how the business handles tax matters and whether there is protection against personal liability. A business owner should consider several factors in choosing a

Legal Forms Of Business Essay

2431 words - 10 pages Legal Forms of Business Paper University of Phoenix LAW/531 Aaron Gershonowitz November 7, 2011 Legal Forms of Business There are many different forms of business in today’s society. They run from sole proprietorship to corporate form. When someone wants to start a business, he/she has to decide what form of business he/she wants to be a part of. Of all the forms of business out there, this paper will be discussing seven of

Legal Forms Of Business Essay

2354 words - 10 pages Legal Forms of Business Mike Robertson LAW531 May 7, 2012 Julie Benes Legal Forms of Business The well-informed businessperson understands choosing the correct business form is important. The type of business form determines what type of business organized, how money flows in and out of the business, how the business and owners are taxed, and the levels of risk to owners. There are several types of business forms. These types are sole

Legal Forms Of Business Paper

942 words - 4 pages Joel Goodwin Legal Forms of Business Paper Business Law/531 April 29, 2013 Shannon Wall Legal Forms of Business Paper When choosing to start a business individually or as a member of a group, there are different forms of business in which they should be operated. The different forms of business: sole proprietorship, partnership, limited liability partnership, corporation, and franchise