Tinker and any of the companys shareholders have limited liability in case of

Tinker and any of the companys shareholders have

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limited liability corporation, Mr. Tinker and any of the company's shareholders have limited liability in case of any lawsuit filed against the business. If the LLC is being sued for breach of contract, only the business's assets and shareholders' investment within the company are at risk of being taken to pay the breach of contract if the court finds their business is guilty. The requirements to form an LLC are specific to each state's limited partnership act; it is a long process. Still, the limited liability and taxation structures can work at the business's shareholders' advantages. Some ways to limit liability exposure for the business and its shareholders' investment as an LLC is to maintain accurate records and carefully read through any contract made with other companies to ensure all the stipulations and demand can be made. The fifth and last business organizational entity to discuss is a corporation. A corporation is a separate entity from its owners; the law grants it certain rights and responsibilities not applied to other businesses (Seaquist, 2012). There are two types of corporations, S and C corporations. Both types offer limited liability to its stockholders since the corporation is treated
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5 as an artificial being. The corporation has the right to own property, lend money, sue, and be sued while the limited liability protects the stockholders' personal assets beyond their investments (Hopson,2014). If the business Tinker's Home Security Services, Inc is registered as a corporation, Mr. Tinker and any of the company's stockholders have limited liability in case of any lawsuit filed against the business. If the corporation is being sued for breach of contract, only the business' assets and stockholders' investment within the company are at risk to be taken to pay the breach of contract if the court finds their business is guilty. Corporations are the most challenging business organizational entities to create when starting a business. They can demand formal business structure, double taxation, and higher capital investment to be created than other partnerships entities. Some ways to limit liability exposure for the business and its stockholders' investment in a corporation is to maintain accurate records, monitor management approach to any contract the company gets involved with, and maintain ethical standards of practice through the corporation. Business Liability Exposure by Entity Type Chart Entity Type Sole Prop. General Partnership LP LLC Corporation Liability Exposure Unlimited The sole proprietor (owner) is responsible for all liability incurred by the business.
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  • Winter '19
  • Stacey Callway
  • Corporation, partner, business owner, Mr. Tinker, LEGAL UNDERPINNING OF BUSINESS LAW

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