Business Entities, Laws, and Regulations

Business Entities, Laws, and Regulations

Business Law BUS/415

03/19/12

Business Entities, Laws, and Regulations

There are a lot of decisions to be evaluated when planning to open a business; sole partnership, limited partnership, general partnership, limited liability corporation, limited liability partnership, franchise, or corporation. There are also many risks to consider, to name a few; financial, personal, and legal. It is up to the owners to determine what is best for themselves and their new business. In most cases it is beneficial to understand what corporation, taxation, and employment laws exist to help make those decisions easier.

Professional Practice Scenario

The Professional Practice scenario has two individuals; Akiva and Tara, who have just received all educational, experiential, and licensing requirements to be obstetricians and want to open a birthing clinic together. Akiva and Tara should open the birth clinic as a Limited Liability Partnership (LLP) to protect themselves against liabilities that may arise due to the business. The LLP will benefit them additionally by allowing them to be taxed on “profits and losses reported on the individual partners’ income tax returns” (Cheeseman, 2010). Additionally an LLP limits their liability to their initial large loan taken out as an investment and they can control the business as a general partnership. The requirements of a corporation is to create the articles of incorporation, have an organizational meeting to create corporate bylaws, elect officers, and hold annual shareholders meetings.

The main risk with this type of business is the injuries to their patients as a result of the birthing process. With a limited liability partnership the partners are protected from personal liability in addition to “many state laws require LLPs to carry a minimum of $1 million of liability insurance that covers negligence, wrongful acts, and misconduct by partners or employees of the LLP”...