Legal Underpinning of Business Law Gregory Wright BUS 670 Legal Environment Andrew Stave Monday April 15, 2013
In this paper I will discuss business structure and organization and how liability differs between each organizational form. My business Tinker’s Home Security Service is being sued by one of my clients for breach of contract. The lawsuit derives from the fact that one of our clients’ property was burglarized and they are stating that we failed to dispatch authorities to their property after the alarm had been triggered. There are different ramifications depending upon how I chose to structure this business and in the next section I will briefly discuss each of them.
The various forms of organization are established by state law. There are a wide variety of business organizations recognized by the states. For example, a popular form of organization is the Limited Liability Company (LLC). The LLC is a state designation. At the federal level, an LLC is considered a partnership. If the LLC so chooses, it can be request to be considered as a corporation at the federal level. There a total of six forms of business organizations;
Sole proprietors are unincorporated businesses. They are also called independent contractors, consultants, or freelancers. There are no forms you need to fill out to start this type of business. The only thing you need to do is report your business income and expenses on your Form 1040 Schedule C. This is the easiest form of business to set up, and the easiest to dissolve. (An LLC with only a single shareholder, a so-called single-member LLC, is taxed as a sole proprietor on a Schedule C.)
