Running head: BUSINESS ENTITIES, LAWS, AND REGULATIONS PAPER

Business Entities, Laws, and Regulations Paper BUS/415

BUSINESS ENTITIES, LAWS, AND REGULATIONS PAPER

Business Entities, Laws, and Regulations Paper Businesses can range from the small mom and pop shops to worldwide corporations. Either way when establishing a business a decision will need to be made regarding the type of entity to use; sole proprietorship, general partnership, limited partnership, limited liability company (LLC), limited liability partnership (LLP), franchise, or corporation. Fortunately, there is guidance, tools, tax accountants, and lawyers to help make the right decision. To understand the different options available to entrepreneurs, a review of two entirely different businesses should add insight. Mei-Lin is a manager for Surebuild, Inc. a construction company. Mei-Lin is trying to fill an open position for a jackhammer operator. Frank owns Bug Be Gone, Inc. and would like to open up franchises across the United States. Each business will be governed by some of the same laws, but there will be difference between the two businesses. Surebuild, Incorporated Surebuild, Inc. needs to hire a jackhammer operator, which requires a high school diploma. Three of the applicants being considerate have jackhammer experience but not all of them have high school diplomas. Applicant A is a 35 year old female, who appears to be pregnant, has jackhammer experience, and is a high school graduate. Applicant B is 55 year old male, has experience operating a jackhammer, but does not have a high school diploma. Applicant C is a 38 year old male, speaks no English, has no high school diploma, but has jackhammer experience. Applicant D is a 23 year old male, who is epileptic, and has no jackhammer experience, but does have a college degree. First glance of the applicants may present a clear picture of whom the job offer should be given too. However, this thinking is nave and before an applicant should be picked. A review of the federal guidelines for equal employment opportunity is a must.

BUSINESS ENTITIES, LAWS, AND REGULATIONS PAPER

Business Control Issues for Corporation and Employment Law Applicable to Surebuilds Hiring Decisions

The passing of the Civil Rights Act of 1964 is to protect employees from employment discrimination. In particular a section of the Civil Rights Acts of 1964 was amended by the Equal Employment Opportunity Act of 1972, section 703 (a)(2) of Title VII, (Cheeseman, 2010, p. 353). The basic concept of this act is an employer shall consider all potential job applicants regardless of an individuals race, color, religion, sex, or national origin, (Cheeseman, 2010, p. 253). In addition, there are other numerous details of the EEO Act of 1972. For instance, each of the applicants is protected by the EEO Act. Applicant A is a physically capable of operating the jackhammer she is should be considered because of the pregnancy discrimination, which was added in 1978 to the EEO Act of 1972, (Cheeseman, 2010, p. 356). Applicants B and C do not qualify for the all requirements of the posted position, therefore, Surebuild, Inc. does not have to consider these applicants. Applicant D does meet all the criteria, however; Surebuild, Inc. should considered him for the position as long the applicants epilepsy will not cause harm to the applicant and others working with him.

Business Taxation Issues for Corporation All corporations are subject to federal taxes, which include, income tax, estimated taxes, and employment taxes (e.g., social security and medicate, income tax withholding, federal unemployment (FUTA) tax), (Internal Revenue Service, 2011, p. 1). State taxes differ from state to state, therefore, depending upon the state the franchise operates will determine the state taxes requirements.

BUSINESS ENTITIES, LAWS, AND REGULATIONS PAPER

Business Liability Issues for Corporations One advantage of setting up a corporation is there is protection from personal liability, up-to the capital contribution to the corporation by the owner or shareholders. However this is if the corporation or the shareholders do not misuse the corporation for ones own personal gain or as a tax shelter. In addition, the corporation must have been setup with enough capital, and funds cannot be intermingled. If any of these situations occurs the liability protection can be lifted, which is also referred to as piercing the corporate veil, (Cheeseman, 2010, p. 295). Bug Be Gone, Incorporated Frank has been a wealthy investor and would like to open up an exterminating business across the United States. The plan is to create the corporation, Bug Be Gone, Inc, and sell chain franchises. The premise of a chain-style franchise is, the franchisor licenses the franchisee to make and sell its products or services to the public is made or the service is provided by the franchisee (Cheeseman, 2010, p. 276). Business Control Issues One control issue for the franchisor is the need to keep the image of the trade name, trademarks, and service marks. In exchange for any, or all of these items the franchise agrees to follow the franchise guidelines, corporate bylaws, code of ethics, state, and federal laws. It is impossible for the franchisor to present in every establishment. Therefore, it is pertinent to have a well laid out franchise agreement. Business Taxation Issues Bug Be Gone, Inc franchises are setup as individual corporations, each corporation is liable to file federal and state taxes. Federal taxes include income tax, estimated taxes, and employment taxes (e.g., social security and medicate, income tax withholding, federal unemployment (FUTA)

BUSINESS ENTITIES, LAWS, AND REGULATIONS PAPER

tax), (Internal Revenue Service, 2011, p. 1). State taxes differ from state to state; therefore, depending upon the state the franchise operates will determine the state taxes requirements. Business Liability Issues According to (Cheeseman, 2010, p. 276), If a franchise is properly organized and operated, the franchisor and franchisee are separate legal entities. This makes the relationship between the franchisor and franchise such as an independent contractor. This shifts the liability from the franchisor to the franchisee for contracts or torts, (Cheeseman, 2010, p. 276).

References Cheeseman, H. (2010). The Legal Environment and Online Commerce: Business Ethics, ECommerce, Regulatory, and International Issues, Chapter 16, Corporations and the Sarbanes-Oxley Act (6th ed.). Upper Saddle River, NJ: Prentice Hall. Cheeseman, H. (2010). The Legal Environment of Business and Online (6th ed.). Upper Saddle River, NJ: Prentice Hall. Cheeseman, H. (2010). The Legal Environment of Business and Online Commerce: Business Ethics, E-Commerce, Regulatory, and International Issues, Chapter 19, Equal Opportunity in Employment (6th ed.). Upper Saddle River, NJ: Prentice Hall. Internal Revenue Service. (2011). Corporations. Retrieved from http://www.irs.gov/businesses/small/article/0,,id=98240,00.html