Legal Responsibilities Considered By Entrepreneurs Paper.
Legal responsibilities emerge as one of the factor entrepreneurs must consider when
deciding to put up a business. In essence, the question regarding the business composition or
structure to operate under is crucial. This is because depending on whether an entrepreneur works alone in establishing a business or in conjunction with various content creators there is
likelihood of facing challenging questions with regard to ownership of assets, payment of taxes, management structure, transfer of ownership, splitting up of profits as well as dissolution of
one’s working relationship.
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In addition, as will be revealed in this paper, publishing business- related materials exposes the owner (s) to various risks including liability for defamation, copyright infringement, invasion of privacy as well as other legal claims. Legal Responsibilities Considered By entrepreneurs Paper. All in all, the kind of
business composition adopted will have a considerable effect on some of these issues.
What follows is a matrix listing various business structures (sole proprietorship, general
partnership, LP, Corporation and LLC) and compares plus contrasts personal liability as a result
of a lawsuit for breaching the contract. Legal Responsibilities Considered By entrepreneurs Paper.
Entity type Formation liability
Sole proprietorship Simple plus relatively inexpensive as far as creation and operation is concerned. Legal Responsibilities Considered By entrepreneurs Paper.
Worth noting is that I can run
the business aided by workers
as a sole proprietor. In most
cases, there are no legal
requirements about the
This form of business, however, means that the owner is personally accountable for all obligations of a business including contractual obligations (Murphy & Higgins, 2010).
Simply put, owner is solely management composition. responsible for observing contracts unlike corporation below. Legal Responsibilities Considered By entrepreneurs Paper.
General partnership Commonly involves an
alliance of individuals as co- owners of a business. They may hire other people to accomplish tasks for them.
Unlike sole proprietorship,
liability for contractual
obligations is shared among
the partners. Partners share the
responsibility to honor
contracts.
LP (limited partnership) Usually involves one or more
general partners plus one/more
limited partners. Quite
expensive to build than
general partnership.
Limited partners possess
limited personal liability with
regard to business contractual
obligations as long as they do
not partake management.
Corporation Often have an unlimited
number of stakeholders or
shareholders and quite
expensive than forms of
partnership and sole
proprietorship. Legal Responsibilities Considered By entrepreneurs Paper.
Almost similar to limited partnership as owners posses limited personal liability regarding contracts.
LLC (limited liability company)
This represents a hybrid structure that takes in the best
Each partner –often called a member- possesses limited of partnerships, sole, proprietorship plus corporation.
liability with regard to contracts. More like a stockholder in a corporation.
To limit liability exposure as the owner of Tinker’s Home Security Service (sole
proprietorship), I would always ensure that contracts are honored to avoid lawsuits altogether. Legal Responsibilities Considered By entrepreneurs Paper.
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Worth noting is that this form of an entity allows me (owner) direct control over administration
including contractual obligations. This also means that I would limit my liability exposure by
easily obtaining liability insurance because I do not have to consult anyone to undertake such a
step. In general partnership, I would limit liability exposure by overseeing that professional
relationships truly exist with partners. Time and again, some supposed partners run away when a
business encounters challenges meaning that the owner is left exposed to liability plus an
uninsured risk. It is always handy to ensure professional relationships with partners to limit
liability (Burling-Phillips, 2014). To limit liability exposure in the scenario of limited
partnership, I (the owner) would make that other partners share similar level of responsibility. In
essence, I would ensure that we become equal business partners via written procedures. In
limiting liability exposure in corporation entity (Tinker & Tailor’s Home Security Service
(general partnership), I would buy insurance plus discuss with the malpractice carrier to identify
areas of liability exposure to determine the necessary coverage (Moore & Ward, 2008). Lastly in
limiting liability exposure in LLC, I would oversee comprehensive operating accord with
members to offer variability. Legal Responsibilities Considered By entrepreneurs Paper. A business that I may own in the future falls within the food service industry in the form
of a restaurant. This type of business is time and again demanding and I am prepared of long
days at work. Some of the functions that will be available include food preparation plus service,
marketing, management, meeting people, inventory control, purchasing as well as personnel
administration. Most likely, the business will be governed by municipal laws and I will be
necessitated to comprehend all pertinent regulations prior leasing a building. Legal Responsibilities Considered By entrepreneurs Paper. Nevertheless, the
restaurant’s type of operation will revolve around catering to a variety of clients through
specializing in certain foods from a particular region or country. Hopefully, this will act as a
competitive edge over others seeing that competition is rife in food service industry. The
restaurant will also include liquor operations in which soft drinks will be sold. The layout will be
rather conventional with a waiting or seating area, cashier area, serving room and a rest room
with an assortment of seating arrangements to make the business more appealing. All in all, will
have the potential to attract clients and retain them because it sets itself apart in terms of services
provided. Most businesses in the food service industry are quite predictable in their services
making them lose their appeal in client’s eye. The business I hope to own someday will prove
unconventional altogether. Legal Responsibilities Considered By entrepreneurs Paper.
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The best organizational form for the business described above will be sole proprietorship.
This type of organizational structure or form has been selected over others because it seems best
suited for the intended business. A restaurant business, particularly one not planning to have
subsidiaries in the near future, needs sole proprietorship to reduce the amount of formal
requirements needed to create and or operate. Indeed, creating a restaurant is relatively easy
compared to establishing a company, for instance, manufacturing one (Gitman & McDaniel,
2007). In most cases, a sole proprietor has the capacity to create plus operate a restaurant without necessarily straining (perhaps economically) oneself. In addition, managing a restaurant is
usually done by individuals –either owners or designated employees. Legal Responsibilities Considered By entrepreneurs Paper. In this case, I will manage
the restaurant and personally hire all employees working in this business. In all likelihood, the
employees possess various skills needed in food service industry. To enable the business deal
with the outside world, I (owner) will contract legal advice by having hiring a professional from
respective field. This will enable me administer the business in an effective manner. Similar to
other sole proprietorship businesses, I (as the owner) will report profit or loss on my personal tax
return. In addition, the liabilities linked to the restaurant will be my personal liabilities. This
means I will undertake the risks of this business to the extent of my assets. All in all, this
prospective business and everything that goes right or wrong will be my responsibility.
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References
Murphy, K and Higgins, M. (2010). Concepts in federal taxation 2010. Massachusetts: Cengage
Learning.
Gitman, L and McDaniel, C. (2007). The future of business: the essentials. Massachusetts: Legal Responsibilities Considered By entrepreneurs Paper.
Cengage Learning.
Burling-Phillips, L. (2014). The professional entity: how to limit your liability exposure.
American Academy of Ophthalmology. Retrieved from
http://www.aao.org/publications/eyenet/201204/practice_perf.cfm
Moore, R and Ward, B. (2008). Using liability limiting entities to manage liability exposure for
Ohio firms. USA: The Ohio State University. Legal Responsibilities Considered By entrepreneurs Paper.