Business Ethics, Laws and Regulations

Business Entities, Laws, and Regulations Paper

Lisa-Anne Barber

University of Phoenix

Business Law

BUS415

Deborah Gronet, J.D.

March 09, 2010

Business Entities, Laws, and Regulations Paper

The following paper will include a discussion of two hypothetical businesses and which organizational structure presents the best choice for each business with consideration for control, taxation, and liability issues as well as the laws, regulations, and risks each business must face. The paper will also include a discussion of a hypothetical situation in which a hiring manager must choose an applicant while considering laws, regulations, and the risks against which the business must protect itself when making the decision.

Professional Practice

Akiva and Tara are newly licensed as obstetricians and want to open a birth clinic together. The will need to take out a large loan to finance their start-up costs. Akiva and Tara would be best served by creating a limited liability partnership (LLP) to organize their business. By forming the LLP, the partners protect themselves from liability beyond their initial capital contribution should the partnership fail or face a lawsuit (Cheeseman, 2010). Members of an LLP are also not personally liable for the malpractice of one partner and states require LLPs to carry substantial liability insurance in exchange for this limited liability. The limited liability protects Akiva and Tara from being held personally liable for the loan they will take out should the business become insolvent. Forming an LLP ensures that Akiva and Tara retain control of their business because they are the only shareholders. For tax purposes, an LLP is not taxed as a separate entity so Akiva and Tara will only pay taxes for the business profits on their individual tax returns. To form their LLP, Akiva and Tara will need to write and file articles of partnership in the state in which they wish to operate (Cheeseman). If they choose to conduct...