Business Entities, Laws and Regulations

Business Entities, Laws, and Regulations Paper

Stephanie Friedensohn Adams

Business Law BUS/415

10/09/2012 – 11/12/2012

November 12, 2012

Facilitator: Noel Woodward

Extermination Business

Frank has a few different options in the creation of his business. He could choose to be a sole proprietor or an entrepreneur. Under these types of organization, Frank’s business is not a separate legal entity – Frank is the business. One of the advantages is the simplicity: no formal legal filings or approvals are necessary, although a license may need to be obtained, and Frank can do business under a name of his choosing and dissolve the business when he chooses. Personal finances are business finances, the owner’s own personal capital and any necessary loans obtained by Frank. All profits of the business are enjoyed by Frank, and his business would not pay taxes at the business level. However, should the business fail, all of his investment and loans are lost as well – a sole proprietor personal responsibility is unlimited. Frank is personally responsible for all outstanding debts owed by his business, success or failure, and is required to file his personal income tax returns inclusive of his business finances (Cheeseman, 2010).

As Frank is creating this business himself as the sole investor, he does not have any partners. Therefore, he would not be able to function as a partnership entity nor a corporation. He could choose to a limited liability company as his form of entity. There are many more regulations and requirements in the formation and execution of an LLC than a sole proprietorship, but the major distinction is that the LLC is a separate legal entity from Frank, and can be formed by a single member or with partners. As the name states, his liability is limited. The LLC can sue, be sued, own property, take loans and investments, as well as enter into contracts with other...