Final Final Business law II - Running head Final Submission...

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Running head: Final Submission Case Studies 1, 2, and 3 1 Final Submission Case Studies 1, 2, and 3 Kristen Roy Southern New Hampshire University
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Final Submission 2 Fred and Sally- Thank you for reaching out to me in regards of your new business venture. I look forward to assisting you along this journey. When we first met, there were some issues you asked me to research. I hope with this email that I resolve them and answer your questions. When starting a new business, there are five basic business entity options that are available. Business entities will determine how the business will be taxed and how the entity will shield the owner against the liabilities. The business entities are: Sole Proprietorships , Partnerships , Limited Liability Company , C-Corporations, and S-Corporations. In a sole proprietorship, you as the only proprietor are in sole control of the management and the profits. The profits are taxed as the personal income of the sole proprietor. All liability is the responsibility of the owner ( Kubasek, 2012). With a Partnership there are at least two partners in the partnership. Each partner is thought as an agent of the partnership. There are three types of partnership: General Partnership, Limited Partnership (LP), and Limited Liability Partnership (LLP). General Partnerships divide profits equally between the partners as well as the management responsibilities. The partners share unlimited personal liability for the firm's debt. An LP is an agreement between at least one general partner and at least one limited partner. The general partners assume unlimited personal liability for the partnership’s debt, whereas the limited partners assume no liability beyond the capital they have invested in it and no part of the management. They do pay taxes on their share of the profits. Within an LLP, each partner is liable for their own negligence and the negligence of those they supervises. All partners assume liability for one partners professional malpractice, only to the extent of the partnership’s assets. The other partner’s assets cannot be touched. An LLP is not considered a separate entity. Each partner pays taxes on their share of the income of the business ( Kubasek, 2012). A Limited
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Final Submission 3 Liability Company (LLC) is another option. LLC’s are a separate legal entity. The owners are referred to as members. An LLC can have single or multi members. Each member’s liability is limited to their capital investment. Profits are taxed as income for the members unless otherwise indicated on the tax forms. An LLC with two or more members can choose to be taxed as a corporation or partnership ( Kubasek, 2012). An LLC can be member managed or manager managed. In a member managed LLC, all members participate in the decision making process of the LLC. Each member is an agent of the LLC and each member has a vote in business decisions. Each member has the authority to make decisions on behalf of the company, but contracts and loan agreements must be approved by a majority of the members. For manager
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