Week 9 Assignment – Applying Legal Knowledge to Business Organization, Agency, Liability, and Contracts.
In this assignment, you will make determinations for one of the scenarios provided below. Read the scenarios, answer the three questions that follow in a 2–4 page paper, and include academic sources to support your decisions and rationale.
- Otis’s Owner loves to bake cookies. Everyone loves his cookies, and his friends recommend that Otis open his own shop. Otis likes the idea, and after saving some money, decides that he will open his own business. Otis is familiar with sole proprietorships, limited liability companies, and corporations, but he is unsure which option would be best for his business.
Consider the scenario and answer the following question:
- Determine if Otis should select a sole proprietorship, limited liability company, or corporation. Explain why the form of business organization selected is the best for Otis.
Week 9 Assignment
As I selected the first scenario, I think that Otis shall select the limited liability company, because, in this sort of business, the entities are based on the protection of the corporation plus developing the ability to pass through the business profits and losses based on the personal income tax return. Therefore, LLCs are mainly deprived of the hybrid theory of the business structure that deals with the owners who can be considered as the members, while taking up the advantages based on the limited liability company that often offers.
Therefore, in order to open a business that comes up with several challenges that can lead to making changes and losses at a particular time, based on the owner of the business based on the requirement to deal with the protection based on a personal basis and deal with the responsibility from the debts and learning about the liabilities. Therefore this plays a significant role, to learn about achieving the formation of an LLC. As a result, starting a business mainly focuses on the expenses to learn about the venture which often requires learning about the high initial capital investment. Along with this analysis, by selecting the limited liability company, Otis can even have the power that can allow his business to get a partner with his friends, in order to help the rise of the capital that is required in order to develop the fund and capital to make improvements in the business that Otis wants to develop (Gelter, 2021).
Apart from this, the number of shareholders are based on the restriction, and the members learn about getting a free structure based on the management of the company. Therefore, selecting the limited liability company, based on the business structure of the United States. Alternatively, selecting this business form, shall deprive of creating a protection to the owners based on their personal responsibilities based on the debts or the liabilities. In this context, limited liabilities companies are considered to be a hybrid form that are entities that combine the characteristics to learn about the corporation to those based on the partnership or the sole proprietorship.
Apart from this, Otis shall get a benefit from his partners if he selects the Liability Limited company. This is because, following this, the Limited Liability Company, mainly takes up the benefit based on the partners to learn the special skills that manage the organizational structure developed under the legal system of a limited liability company. Therefore, this business structure requires to get an appropriate form of structure under the Limited liability Company, as this helps in exercising the neighborhood, which requires the retail business to learn about the consultancy administration.
Apart from this, based on the construction of the business which is suitable based on the business administration to learn about the consultancy administrations. Therefore, based on the construction which acts as a suitable thing for the organization developed by Otis, which happens to be underlying on the stage, that is having own hazard with a little group of workers. As Otis is trying to develop the section, based on the lawful criteria in order to construct his business under the cause of his private pastry shop that might work (Gelter, 2021).
The reason why I want Otis to select the limited liability company is that the largest benefit given by the limited liability company is mainly based on the theory that protects the members as well as the owners who are personally liable for the operations taking place within the business to learn about the debts and the liabilities of the business. Therefore, in order to get benefits, Otis requires to get a partner based on special skills in management to bring success to his business. Apart from this, Otis will develop the ability to pass through a taxation process along with the shareholders with LLCs who are not taxed on a separate basis on the note of the business, in order to get profit and loss to pass through the company. LLC is based on learning about the advantages of getting an understanding of the corporation because of the formalities that are required based on the tiny annual paperwork. However, considering the advantages of the LLC, where Otis shall develop and open a limited liability company.
Gelter, M. (2021). Die US-amerikanische LLC im Überblick (An Overview of the US Limited Liability Company). Österreichisches Recht der Wirtschaft RdW_digitalOnly, 30.