Prof. Dan

profiletlconley
ctu-businesslaw-chat7-a_1.ppt
Home>Law homework help> Prof. Dan

MGMT-235

Chat Presentation: 7 and 8

Discussion Topics:

The Phase 4 Discussion Board (PH 4 DB)

AND

The Phase 4 Individual Project (PH 4 IP)

Professor Jennifer Hacker, J.D.

*

  • Due Sunday, June 14th.
  • Worth 75 points.
  • Prepare a detailed outline of your PHASE FOUR INDIVIDUAL PROJECT (not your “Key Assignment Draft”-ignore that phrase) for this week's discussion board.

  • Your PH 4 IP is your BUSINESS PLAN. Your PH 4 DB is an outline of your BUSINESS Plan. You have not written this plan yet. You will do so in your PH 4 IP.

  • Because this assignment relies on the one that follows it, we will start with the NEXT assignment, IP 4.

*

  • Due: Monday, June 15th.
  • Worth 150 points.
  • You can have two extra days to turn this in without penalty; by Wednesday, June 17th .

  • THIS IS YOUR LAST EXTENSION
  • Minimum word count: 1100 words.

  • Points will be taken off for not meeting the writing requirement; do not paste the scenario into your work
  • Your title does not count
  • Your references don’t count
  • Follow APA formatting

*

  • ONE: Introduction of your proposed business.

  • TWO: CHOOSE a BUSINESS FORM and then describe the advantages and disadvantages of the business form you will use.

  • THREE: Description of the specific steps you will need to follow to successfully and legally start the business.

*

  • STEP ONE:
  • Introduction of your proposed business. What business will you be in?

  • STEP TWO:
  • CHOOSE A BUSINESS FORM:
  • Describe and explain the advantages and disadvantages of the business form you will use. You can ONLY choose from these forms:

  • Partnership
  • Corporation
  • LLC

  • NOTE: You CANNOT decide to be a sole proprietor. If you do, your outline will be given a zero and you will have to revise.

*

  • THREE:
  • Describe the specific steps you will need to follow to successfully and legally start the business.

*

  • Here, you will consider what you will sell or do in your business.

  • This step is NOT about your business form.

  • This step IS about what you will sell or do.

*

Propane and Propane Accessories?

Nuclear Power?

Toy Manufacturing?

*

  • The paper business?

  • Restaurant management?

*

Describe and explain the advantages and disadvantages of the business form you will use.

You can ONLY choose from these three business forms:

  • Partnership
  • Corporation
  • LLC

Note: You cannot choose a sole proprietorship. If you do so, your work will get a zero grade and you will have to revise.

*

  • A partnership is a single business where two or more people share ownership.

  • Each partner contributes to all aspects of the business, including money, property, labor or skill. In return, each partner shares in the profits and losses of the business.

("Partnerships," 2013)

*

  • Because partnerships entail more than one person in the decision-making process, it’s important to discuss a wide variety of issues up front and develop a legal partnership agreement.

  • This agreement should document how future business decisions will be made, including how the partners will divide profits, resolve disputes, change ownership (bring in new partners or buy out current partners) and how to dissolve the partnership.

  • Although partnership agreements are not legally required, (but are required in this assignment!) they are strongly recommended and it is considered extremely risky to operate without one. ("Partnerships," 2013)

*

There are two general types of partnership arrangements:

  • General Partnerships assume that profits, liability and management duties are divided equally among partners. If you opt for an unequal distribution, the percentages assigned to each partner must be documented in the partnership agreement.
  • General partners are not shielded from liability.

  • Limited Partnerships are more complex than general partnerships. Limited partnerships allow partners to have limited liability as well as limited input with management decisions. These limits depend on the extent of each partner’s investment percentage. Limited partnerships are attractive to investors of short-term projects.
  • Limited partners ARE shielded from liability.

*

("Partnerships," 2013)

  • A general partnership is a business entity that is made up of two or more persons or entities to carry on a trade or business.

  • In a general partnership, each partner contributes money, property, labor, or special skills and each partner shares in the profits and losses from the business.

  • In a general partnership all the partners are personally liable for the partnership debts.

  • In a limited partnership, limited partners are not liable for the partnership's debts beyond the funds they contribute to the partnership.

  • A limited partner will normally have little knowledge or participation in the activities of the partnership.

("General partnerships," 2013)

*

  • A limited partnership (or limited liability partnership) is formed by two or more persons and they must have at least one limited partner and one general partner.

  • Limited partners are only liable for the partnership's debts equal to their investment in the partnership.

  • A limited partnership is similar to a general partnership except that it has two classes of partners.

  • The general partner(s) have full management and control of the partnership business but also accept full personal responsibility for partnership liabilities.

  • Limited partners have no personal liability beyond their investment in the partnership interest.

  • Limited partners cannot participate in the general management and daily operations of the partnership business without being considered general partners in the eyes of the law.

("Limited liability partnerships," 2013)

*

  • What sets the corporation apart from all other types of businesses is that a corporation is an independent legal entity, separate from the people who own, control, and manage it. In other words, corporation and tax laws view the corporation as a legal "person" that can enter into contracts, incur debts, and pay taxes apart from its owners.

  • Other important characteristics also result from the corporation's separate existence: A corporation does not dissolve when its owners (shareholders) change or die, and the owners of a corporation have limited liability -- that is, they are not personally responsible for the corporation's debts. ("What is a," 2012)

*

Most people have heard that forming a corporation provides "limited liability" -- that is, it limits your personal liability for business debts. What you may not know is that there's more to creating and running a corporation than filing a few papers. You'll need to keep good records to handle the more complicated corporate tax return and, in order to retain your limited liability, you must follow corporate formalities involving decision making and record keeping. In short, you've got to be organized.

Limited Personal Liability

One of the main advantages of incorporating is that the owners' personal assets are protected from creditors of the corporation. For instance, if a court judgment is entered against your corporation saying that it owes a creditor $100,000, you can't be forced to use personal assets, such as your house, to pay the debt. Because only corporate assets need be used to pay business debts, you stand to lose only the money that you've invested in the corporation. ("What is a," 2012)

*

Exceptions to Limited Liability

  • There are some circumstances in which limited liability will not protect an owner's personal assets. An owner of a corporation can be held personally liable if he or she:
  • personally and directly injures someone
  • personally guarantees a bank loan or a business debt on which the corporation defaults
  • fails to deposit taxes withheld from employees' wages
  • does something intentionally fraudulent or illegal that causes harm to the company or to someone else, or
  • treats the corporation as an extension of his or her personal affairs, rather than as a separate legal entity.

  • This last exception is the most important. In some circumstances, courts can rule that a corporation doesn't really exist and that its owners should not be shielded from personal liability for their acts. ("What is a," 2012)

*

The LLC is a hybrid entity and it brings together some of the best features of partnerships and corporations. It is a great choice for entrepreneurs who want to move beyond the sole proprietorship or partnership.

  • Probably the single greatest disadvantage of the corporate form is the burdensome range of formalities that corporate managers must observe. A modern corporation's heavy administrative burden is a remnant of the more traditional and formal legal system under which corporate law was cultivated. The LLC changed all that. (Meier, 2005)


*

  • Limited liability companies (LLCs) have been around since 1977, but their popularity among small-business owners is a relatively recent phenomenon. The LLC offers the liability protection benefits of the corporation without the corporation's burdensome formalities. This simplicity has made the LLC an instantly popular business form for smaller companies.

  • LLCs are the favorite choice for small businesses with one to three owners working who don't plan to grow the business significantly and don't expect to raise significant amounts of cash. But as the number of owners grows, the corporation often becomes a more attractive choice as a business form.

  • An LLC is a hybrid entity, bringing together some of the best features of partnerships and corporations. LLCs were created to provide business owners with the liability protection that corporations enjoy without the double taxation. Earnings and losses pass through to the owners and are included on their personal tax returns. (Meier, 2005)

*

  • Sound similar to an S corporation? It is, except an LLC offers small-business owners even more attractions than an S corporation. For example, there is no limitation on the number of shareholders an LLC can have, unlike an S corporation, which has a limit of 75. In addition, any member or owner of the LLC is allowed a full participatory role in the business's operation; in a limited partnership, on the other hand, partners are not permitted any say in the operation.
  • Unlike corporations (and like partnerships), LLCs do not have perpetual life. Some state statutes stipulate that the company must dissolve after 30 or 40 years. Technically, the company dissolves when a member dies, quits or retires. (Meier, 2005)

*

STEP THREE: Describe the specific steps you will need to follow to successfully and legally start the business.

  • For this step, you will describe and explain each step it will take to form your company.

  • Make sure you start by picking a STATE. You can choose your own state or any other state, but it must be here in the United States and not an internationally-based business.

  • After choosing a state, describe and explain the steps to legally forming your business.

*

To form a partnership in California, you must register your business with your state, a process generally done through your Secretary of State’s office.

You’ll also need to establish your business name. For partnerships, your legal name is the name given in your partnership agreement or the last names of the partners. If you choose to operate under a name different than the officially registered name, you will most likely have to file a fictitious name (also known as an assumed name, trade name, or DBA name, short for "doing business as").

Once your business is registered, you must obtain business licenses and permits. Regulations vary by industry, state and locality. Use our Licensing & Permits tool to find a listing of federal, state and local permits, licenses and registrations you'll need to run a business. ("Partnerships," 2013)

*

  • To form your own corporation, you must take these essential steps.

  • Choose an available business name that complies with your state's corporation rules.
  • Appoint the initial directors of your corporation.
  • File formal paperwork, usually called "articles of incorporation," and pay a filing fee that ranges from $100 to $800, depending on the state where you incorporate.
  • Create corporate "bylaws," which lay out the operating rules for your corporation.
  • Hold the first meeting of the board of directors.
  • Issue stock certificates to the initial owners (shareholders) of the corporation.
  • Obtain any licenses and permits that are required for your business. (Laurence, 2012)

*

  • Forming an LLC (limited liability company) is not as hard as most people think. Here are the steps you need to take to make your LLC a legal reality.
  • Choose an available business name that complies with your state's LLC rules
  • File formal paperwork, usually called articles of organization, and pay the filing fee (ranging from about $100 to $800, depending on your state's rules).
  • Create an LLC operating agreement, which sets out the rights and responsibilities of the LLC members.
  • Publish a notice of your intent to form an LLC (required in only a few states).
  • Obtain licenses and permits that may be required for your business. (Laurence, 2012)

*

In 1100 words or more:

  • ONE: What are you planning to do?

  • TWO: What business form will use?

  • THREE: The specific steps to legally start your business.

*

Draft an outline of your Business Plan. It can be just one page long, or longer if you choose. What I have to see is that you have organized your work this way:

Business

Name

What type of business? What will you sell or do?

Your choice of business form and the advantages and disadvantages of the FORM you chose.

Choose a state

Choose a business form; Partnership, Corporation or LLC

Steps you must take.

Step 1

Step 2

You must add detail to this structure, but you can and should follow this as a guide. If you do follow this and if you draft an outline that contains the specifics of your company, you will have an easy time with PH 4 DB, PH 4 IP, AND the PH 5 IP.

*

  • The Phase Four DB is due Sunday, June 14th
  • Your first post can be a rough outline but must be made by Wednesday, June 10th.
  • NO references required with your Discussion Board
  • You must respond to at least ONE other student.

--------------------------------------------------------------

  • The Phase Four IP is due Monday, June 15th
  • You have an extension until Wednesday, June 17th but that is your last extension
  • REFERENCES ARE REQUIRED with your IP.
  • Your Phase FIVE IP will build on your PH 4 IP so the better you do, the less you’ll have to do in PH 5.

*

  • Partnerships. (2013, January 15). Retrieved from http://www.sba.gov/content/partnership
  • General partnerships. (2013, January 10). Retrieved from http://www.taxes.ca.gov/Income_Tax/genpartbus.shtml
  • Limited liability partnerships. (2013, January 10). Retrieved from http://www.entrepreneur.com/encyclopedia/limited-liability-partnership
  • Limited liability limited partnership. (2013, January 5). Retrieved from https://www.ftb.ca.gov/businesses/bus_structures/LLLpartner.shtml
  • What is a corporation?. (2012, November 12). Retrieved from http://www.nolo.com/legal-encyclopedia/corporations-faq-29122.html
  • Meier, D. (2005, June1 1). Llc basics. Retrieved from http://www.entrepreneur.com/article/77966
  • Laurence, B. (2012, July 24). How to form a corporation. Retrieved from http://www.nolo.com/legal-encyclopedia/form-corporation-how-to-incorporate-30030.html
  • Laurence, B. (2012, October 1). How to form an llc. Retrieved from http://www.nolo.com/legal-encyclopedia/form-llc-how-to-organize-llc-30287.html
  • Partnership agreement. (2012, May 5). Retrieved from http://www.inc.com/encyclopedia/partnership-agreement.html
  • Articles of incorporation. (2012, May 10). Retrieved from http://www.inc.com/encyclopedia/articles-of-incorporation.html

*

  • Task Requirements: 37.5
  • Demonstration and application of knowledge: 82.5
  • Academic writing and format: 30
  • Total points possible: 150

*

  • IF YOU DO A GREAT JOB ON IP 4, then you will have a much easier time on your PH 5 IP!

  • Doing very well on IP 4 will make it smooth sailing for the rest of this course! Put in your best effort! 

*

*