This paper will examine two business scenarios and determine which business entity is the best choice for each business after taking in to consideration control, taxation, and liability issues. In addition laws and regulations each business must consider in starting the business will be identified along with the risks that each business must protect itself against. Next this paper will examine a construction scenario and identify the employment laws and regulations with which the business must comply in making a decision in regards to which applicant to hire.
Lou and Jose plan to open a sports bar and restaurant where customers socialize and watch sporting events on large-screen TVs that hang around the bar. They do not have much money, but they do have Miriam, a wealthy investor who does not have time to participate in the business, but wants to provide capital to start the business in return for a percentage ownership. Business Entity For this business scenario the best business entity is a limited partnership or special partnership. There are two types of partners in a limited partnership: general partners and limited partners.
General partners invest capital, manage the business, and are personally liable for partnership debts. Limited partners invest capital but do not help with the management aspect and are not personally liable for debts beyond their capital contribution. Lou and Jose will be able to contribute their money and be responsible for managing the business. Miriam will contribute her money and that is all that is required of her. Often in a limited partnership, there is a limited partnership agreement that states the rights and duties of both partners. This document will state the terms and conditions regarding the operations, termination, and dissolution of the partnership. The limited partnership agreement may also describe how profits and losses broken
Mei-Lin is the hiring manager for Surebuild, Inc., a new construction company. She has advertised a position as a jackhammer operator. The position’s description states that the successful applicant must have a high school diploma. The following people apply for the position: Michelle, 35, who appears to be pregnant, is a high school graduate, and was formerly employed as a jackhammer operator; Eric, 55, who is experienced with a jackhammer, but has no high school diploma; Felipe, who is 38, speaks no English, has no high school diploma, but is experienced with a jackhammer; and Nick, 23, a college graduate who is epileptic, and has no experience with a jackhammer.
Starting in the 1960s, Congress enforcing a set of federal laws that eliminated employment discrimination. These laws were passed to guarantee equal employment opportunity to all employees and job applicants. They have been broadly interpreted by the federal courts, particularly the U.S. Supreme Court (Cheeseman, p. 352). Title VII of the Civil Rights Act of 1964 was put in to place to eliminate discrimination by race, color, national origin, sex, and religion. Cheeseman (2010) states “Title VII applies to employers with 15 or more employees, all employment agencies, labor unions with 15 or more members, state and local governments and their agencies, and most federal government employment.” Mei-Lin cannot discriminate against Michelle because she is pregnant. In 1978 the Pregnancy Discrimination Act was enacted as an amendment to Title VII. Mei-Lin could decide to not hire anyone who is younger than 40 years old and that would not be discrimination according to Age Discrimination in Employment Act.
This act enables employers to maintain a hiring policy of hiring only workers 40 years of age or older. The Americans with Disabilities Act (ADA) protects Nick from not being hired due to his epilepsy. Mei-Lin would be able to turn down Eric and Felipe because they do not have a high school diploma. The advertisement did not say that jackhammer experience was required so she cannot turn down applicants because they do not have experience. Mei-Lin needs to be careful when considering applicants and how they are turned down.
Before starting a business it is important to consider all business entities and the advantages and disadvantages of each. In all business scenarios there are rules, regulations, and risks that need to be considered before starting the business and also while running the business. This paper explored two different types of partnerships and some advantages as to why they should be partnerships. The last scenario explored the different risks with hiring employees and how to avoid discrimination cases. These are all important factors to consider if there is a business just starting or a business that has been up and running for 20 years. References
American Association of Birth Centers. (2007). Birth Center Regulations. Retrieved from http://www.birthcenters.org/open-abc/bc-regs.php Cheeseman, H.R. (2010). The legal environment of business and online commerce: Business ethics, e-commerce, regulatory, and international issues. (6th ed.) Upper Saddle River, NJ: Pearson Prentice Hall.