Assignment 1

Assignment 1 - April 22, 2010 LAW 500 LEG 500 LAW, ETHICS,...

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April 22, 2010 LAW 500 LEG 500 – LAW, ETHICS, AND CORPORATE GOVERNANCE LEG 500 – Assignment 1 An Ethical Analysis of a Case Study: Business Structure Dagmar Sousa Strayer University
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April 22, 2010 LAW 500 Introduction The United States of America has different business structures. Depending on the business one structure could suite better than another structure. The business structure also influences the taxation of the business and the owner’s income as well as how to run the business (ATBS Business Services, 2008). The different business structures are (The Legal Environment of Business, 2009) Sole Proprietorship Partnership – general partnership or limited partnership Corporation – closely held corporation, publicly held corporation, multinational corporation, Subchapter S corporation, or professional corporation. Limited liability company Cooperative or not-for-profit organization Pros and cons per business structures Each business structure has different pros and cons for a business. It always depends what the owner want to achieve and what the goal is. That is one reason how to choose the correct form of the business (The Legal Environment of Business, 2009). Business Structure Pros Cons Sole Proprietorship Few legal formalities Taxed as personal income Complete control over the business Personal liable for all losses Cannot raise capital Business decision depend only on one person Partnership Equal liable partners Taxed as personal income Equal personal liable with looses (unless limited partnership)
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April 22, 2010 LAW 500 Decisions made together Limited in raising money No total control, each partner has the same control Closely Held Corporation Family and friends own stocks Control over corporation Liability protection Expensive to set up Restrictions in selling stocks Double taxation Publicly Held Corporation Easy to raise money Liability protection Many investors Expensive to set up Double taxation Rules and regulations Multinational Corporation Easy to raise money Liability protection Operates in different countries Expensive to set up Double taxation Rules and regulations from different countries Subchapter S Corporation Liability protection No double taxation Hybrid between corporation and partnership Expensive to set up Rules and regulations Max. 35 shareholders Limited liability company No limit in the numbers of members Personally taxed only Limited liability Cannot become public Relatively new business structure Ethical issue – Tyco International, CEO Dennis Kozlowski Background:
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April 22, 2010 LAW 500 Tyco’s former CFO Mark Swartz and CEO Dennis Kozlowski were sent sentenced to prison in September 2005 for a period of 8 to 25 years. Both men were found guilty of stealing several million dollars of company money. Dennis Kozlowski used that money for his eccentric
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This note was uploaded on 03/10/2012 for the course LEG 500 taught by Professor Sette during the Spring '10 term at Strayer.

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Assignment 1 - April 22, 2010 LAW 500 LEG 500 LAW, ETHICS,...

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