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Learning Activity: Recommend a business structure for Clean / Explain and justify your recommendation Project 2: The project requires you to identify and analyze legal issues and to make recommendations, There will be 1 single report with subheadings for each Clean employee: Conner, Denise, Larisa. and Sam.
BMGT 380 Week 8
Week 8 – Business Organizations
Sole Proprietorships, Partnerships, Limited Liability Partnerships, Limited Liability Companies, Corporations
Introduction: Businesses are established in various organizational forms, as is appropriate and most advantageous for each
particular business. The most important criteria to consider in forming a business organization are the ease and cost of formation and
termination, the capital needed to establish and continue the business, the personal liability of individual owners, and tax liability for
the business. Various types of business organizational forms include sole proprietorships, general partnerships, limited liab ility
partnerships, limited liability companies, and corporations. Classifications of corporations include domestic, foreign and alien
corporations, public and private corporations, nonprofit corporations, closely held corporations, and professional corpo rations.
Special Forms of Business Organization
Joint Venture:
A joint venture occurs when individuals or businesses combine forces in order to share revenue. Businesses may share intellectual
information, funds, market research, and/or products in order to increase their revenue. Joint ventures allow businesses to i ncrease
revenue and penetrate markets that they may not be able to reach on the ir own.
Joint ventures are not traditional partnerships, meaning that they will generally dissolve after a specific business goal has been
reached. Reasons for engaging in a joint venture may include: increased profit, access to foreign markets, globalizat ion, and
increased strength and recognition. Joint ventures should include a contract that specifies how much is invested by each party, and
how and when these investments will be returned. Sometimes when joint ventures occur between different countries, c ultural
business differences can cause controversy.
Syndicate:
A syndicate is a group of individuals or businesses that come together to accomplish a common business goal. Syndicates will often
form when one business does not have enough resources or capital to carry out a specific business transaction. The members will
combine resources, and once the business transaction has been completed, the syndication will dissolve.
The companies involved in the syndicate will share the risks and profits of an invest ment. This often occurs when the cost of an
investment is considerably high or risky. Investment companies, banks, and insurance companies will commonly engage in
syndicates.
Joint Stock Company:
A joint stock company will offer shares of stock to its members based on the amount of financial contribution they have provided to
the company. Joint stock companies are a type of limited liability corporation, meaning that the shareholders will generally not be
held liable for any debt that is incurred by the company.
There are generally two types. A private joint stock company will offer shares of stock to the higher up members of the compa ny,
such as the owners and managers. Public joint stock companies will offer shares to all the members of the company, as we ll as sell
shares in the open market. Shareholders within a joint stock company are eligible to vote on certain policies within the comp any,
such as the annual budget. They will also receive dividends of the company’s profits based on the amount of shares they own, as well
as debentures.
Business Trust:
A trust is a legal concept in which property or assets are managed by a trustee for the interests of beneficiaries. This is often seen in
estate and trust planning when a person leaves his or her assets in the hands of a trustee who will manage the funds until the
beneficiaries reach a certain age. The person who owns the property is called the settler.
A business trust is formed in a similar way. It is when the operation and ownership of a business is entr usted to an appointed trustee.
This person does not receive the profits of the business, but will manage the profits until they can be turned over to the be neficiaries.
In order to establish a business trust, the organization must prove that it is engaged in legitimate business practices. This can include
the buying, selling, and/or manufacturing of products. It can also include investments.
Cooperative:
A cooperative is a special business formation where all members are part owners and own equal shares. Me mbers will elect directors
and managers to prepare annual reports and handle the day-to-day business operations.
The International Cooperative Alliance is legislation that governs the specific regulations for running a cooperative. Profit s will be
invested back into into the business to pay for expenses and the rest will be divided among the members. All members will receive
equal compensation.
Membership in a cooperative is completely voluntary, however, the members must be willing to take on the respons ibility of being
part owner. Housing cooperatives are a common type of this special business form. The organization will buy, or sometimes bui ld, a
housing complex and each member will be offered a unit.
Source: Laws.com, Business-Intelligence: http://business.laws.com/business-intelligence
1
BMGT 380 Week 8
Complete
• Learning Activity / Project 2 due Saturday, 11:59 p.m. ET
Weekly Learning Outcomes
•
•
•
Compare the options that are available for structuring a business.
Explain the advantages and disadvantages of the different business structures.
Select the most appropriate business structure to optimize the interest of the business owner .
Learning Resources
Major Concepts:
o
Partnership
o
General Corporation
o
Limited Liability Company
Assigned Readings
o
Choosing a Business Structure https://www.sba.gov/business-guide/launch-your-business/choose-business-structure
o
Partnerships https://www.findlaw.com/smallbusiness/incorporation-and-legal-structures/types-of-partnerships.html
o
General Corporation https://www.delawareinc.com/general-corporation/
o
Limited Liability Company
https://bizee.com/limited-liability-company?redirect=fromIncfile
Learning Activity W8
General Instructions for Learning Activities
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•
Read/watch all assigned materials listed for the week in the Course Content
Cite to assigned materials in all responses in Learning Activities
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•
•
Use only assigned materials to complete Learning Activities; do not use the internet unless otherwise instructed
Include in-text citations and a Reference List for in-text citations
Write in correct, complete sentences, in paragraph format unless otherwise instructed
Tips for Formatting and Structuring Analysis:
•
•
•
•
•
•
•
Write in complete sentences in paragraph format.
Use in-text citations citing to relevant assignment materials.
Double-space; 12-point Arial or Times Roman font.
Introductory Sentence: Begin with an introductory sentence or very brief paragraph that states your conclusion to the
questions asked.
Concluding Sentence: End the discussion with a concluding sentence or a very brief paragraph that summarizes your
conclusion/what you discussed.
Support Arguments and Positions: Please refer to the module in Content, “How to Support Arguments and Positions”.
Use the American Psychological Association (APA) citation format for all citations.
Background Facts You Need To Know: In addition the background facts set forth here, you must consider the facts set forth in the
course introduction.
Connor, Denise, Larisa, and Sam recognize an essential early step in creating Viral Clean (‘Clean”) is to agree on a business
organizational form and clarify the owners’ roles because each has different priorities, interests, and expectations about the business.
Businesses are created in one of several organizational structures or forms. Choosing a business structure involves several factors,
including which structure is most favorable for the company and its owners.
2
BMGT 380 Week 8
The goal for Clean is to minimize legal risks and liabilities and tax liabilities for the owners and the business. The owners understand a
business organizational structure can achieve this goal and define their managerial roles and responsibilities clearly to satisfy their
interests and maximize their areas of expertise.
Connor, Denise, Larisa, and Sam agree that weighing and balancing advantages and disadvantages for the company and its owners is the
heart of the process of choosing a business structure. The owners have met privately to discuss their decision. They are now ready to
meet with TLG for further analysis, negotiation, and a decision regarding the Clean business structure.
Instructions
To assist in this process, Winnie and Ralph asked you to assess several business structures and their characteristics, advantages, and
disadvantages for Clean. Those structures are:
•
•
•
•
•
General Partnership
Limited Partnership
Limited Liability Partnership
General Corporation
Limited Liability Company
Evaluate and synthesize this information, and do the following two things:
1. Chart You Need to Prepare: Create a comparison matrix showing the five types of business structures and comparing and
contrasting each type of business structure.
You may use the chart format in the hyperlink above, or create a similar chart, or create an excel chart.
The chart should include several areas for comparison, (e.g., the procedure for the formation, cost of formation, etc.). The chart should
consist of various types of liability for comparison.
The chart should be an in-depth and comprehensive comparison.
Ensure each organizational structure’s pros and cons are easily compared in the chart.
2. Report You Need to Prepare: Write a report to Clean owners:
•
•
A: Recommend a business structure for Clean that best minimizes tax and personal liability for the new business and its owners
B: Explain and justify your recommendation, specifically and in detail. Your analysis must consider the interest of each
business owner noted in the “INTRO TO 380” module in Content.
Tips for Formatting Report: The report should use the following format
Report
TO:
Winnie James, Ralph Anders
FROM:
(your name)
RE:
Clean Business Structure
DATE:
1.
2.
Due on Apr 6, 2024 11:59 PM
3
BMGT 380 Week 8
Project 2:
Purpose: The purpose of this project is to reflect on, analyze and apply tort law, agency and contract law, and their potential
rights, risks, and liabilities in a business. The project requires you to identify and analyze legal issues and to make
recommendations.
You will also develop skills in critical thinking to create an in-depth comprehensive analysis.
The project relates to the concepts covered in weeks 1-7. You should refer to assigned materials in earlier weeks of the course.
This project relates to the following course outcomes:
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•
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recommend appropriate actions in the business environment based on an understanding of sources of law, substantive legal
concepts, legal process and procedure, and available remedies
analyze contractual rights, obligations, liabilities, and remedies in the business environment
analyze tort rights, obligations, liabilities, and remedies in the business environment
Background:
The owners of Viral Clean (Conner, Denise, Larisa, and Sam) are responsible for different components of the business. Each
aspect has a legal implication. Please prepare a report that discusses the law for each aspect. For each aspect, the report must
address the following:
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•
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Identify the component that is central to each of the four scenarios and explain the relevant area of the law.
As a general matter, explain why understanding the area of the law helps Clean.
Identify Clean’s rights and liabilities in the area of the law and make specific recommendations of how Clean can
minimize its liabilities.
Conner:
Conner is responsible for purchasing PPE and cleaning supplies from EPI. Although Conner is a Clean owner, he also operates his
own separate company. His company sells outerwear and athletic clothing online. While running his company, he had several
instances where the manufacturer did not deliver the correct product to his company. He also had cases where the clothing did not
meet the contract specifications. As a result, his company had shipping delays to the customers, and his company also shipped the
wrong product to its customers.
Conner wants to avoid this situation for Clean. However, if this should happen to Clean, Conner wants to understand Clean’s rights
as a purchaser from EPI and its liabilities as a reseller to customers. Please address the law to help Conner understand Clean’s
rights and liabilities.
Denise:
Denise is responsible for human resources, risk-avoidance, and insurance for Clean. Denise is preparing a workers’ handbook for
Clean. The handbook’s relevant sections cover job-related injuries to workers and Cleans’ customers. The workbook explains the
actions that must be taken when there are on-the-job injuries. Clean’s workers include employees and independent contractors.
Please address the law to help Denise prepare the relevant sections of the workers’ handbook.
Larisa:
Larisa is responsible for executive talent acquisition. Clean will retain the executives using three-year employment
agreements. Larisa wants to ensure that the employment agreements are valid and enforceable. The agreements must address the
executives’ duties and authority.
Larisa does not know what is required to ensure that the employment agreements are valid and enforceable. She is also unsure of
the law that cover’s the executives’ duties and authority. Please address the law that will assist Larisa.
Sam:
Sam is responsible for government compliance and product development. Sam ensures that all PPE and cleaning solutions meet the
Center for Disease Control’s guidelines. Sam also monitors the laws in the states where Clean’s PPE and cleaning solution are
sold. He ensures that the states are not planning to ban any of the cleaning solution’s ingredients.
Please address the law that will assist Sam when states plan to ban the cleaning solution’s ingredients.
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BMGT 380 Week 8
Instructions
There will be 1 single report with subheadings for each Clean employee: Conner, Denise, Larisa. and Sam. Each subheading should
include the following:
•
•
•
Identify the component that is central to each of the four scenarios and explain the relevant area of the law.
As a general matter, explain why understanding the area of the law helps Clean.
Identify Clean’s rights and liabilities in the area of the law and make specific recommendations of how Clean can
minimize its liabilities.
No narrative minimum is provided. Be sure to cover each component thoroughly, demonstrating your understanding and
application of the law.
Format
Report
TO: Winnie James, Ralph Anders
FROM: (your name)
RE:
Clean risks and liabilities
A brief introduction of the purpose of the report
A. Conner
(1)
(2)
(3)
B. Denise
(1)
(2)
(3)
C. Larisa
(1)
(2)
(3)
D. Sam
(1)
(2)
(3)
5
BMGT 380 Week 8
______________________
Tips for Formatting and Structuring Analysis:
•
•
•
•
•
•
Write in complete sentences in paragraph format.
Use in-text citations citing to relevant assignment materials.
Double-space; 12-point Arial or Times Roman font.
Introductory Sentence: Begin with an introductory sentence or very brief paragraph that states the purpose of this
report.
Concluding Sentence: End the discussion with a concluding sentence or a very brief paragraph that summarizes your
conclusion/what you discussed.
Support Arguments and Positions: Please refer to the module in Content, “How to Support Arguments and
Positions.” A References page may be added at the end of the report.
Review the Project Memorandum
Thoroughly read the project to ensure all required elements are present.
Review the grading rubric to ensure that you gain the most points possible for this assignment.
Proofread for spelling and grammatical issues.
NOTE: All submitted work is to be your original work. You may not use any work from another student, the Internet or an online
clearinghouse. You are expected to understand the UMGC Academic Integrity and Plagiarism Policy and know t hat it is your
responsibility to learn about instructor and general academic expectations regarding proper citation of sources as specified in the
APA Publication Manual, 7th Ed. (Students are held accountable for in-text citations and an associated reference list only)
Due on Apr 6, 2024 11:59 PM
6
BMGT 380
Comparison Chart Template
TOPIC:
Attribute 1
Item 1
Item 2
Item 3
Item 4
Attribute 2
Attribute 3
Attribute 4
Attribute 5
WEEK 8
BUSINESS ORGANIZATIONS
MAUREEN WALSH DAVID
BGMT 380 SPRING 2024
AGENDA
• Business Organization
• Learning Activity
• Final Project
• Course Evaluation
• Farewell Discussion
2
TYPES OF BUSINESS ORGANIZATION
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General Partnership
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Limited Partnership
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Limited Liability Partnership
•
General Corporation
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Limited Liability Company
3
GENERAL PARTNERSHIP
• General Partnerships
• A general partnership involves two or more owners carrying out a business purpose. General partners
share equal rights in connection with the management of the business. They also share equal
responsibility. Any individual partner can bind the entire group to a legal obligation.
• Each individual partner assumes full responsibility for all the business’s debts and obligations. This is
sometimes called unlimited liability. This means a business owner’s personal assets can be used to
settle business debts. Such personal liability can be daunting, but it comes with a tax advantage.
• Partnership profits are not taxed to the business but pass through to the partners. This includes the
gains on their individual tax returns at a lower rate. Each partner files a personal income tax return, and
they don’t face double taxation.
• This type of business structure is easy to start. You don’t need to file an article of incorporation with the
secretary of state. To start, decide on a business name, get a business license (if needed), and open a
bank account for your business.
4
LIMITED PARTNERSHIP
• A limited partnership is a partnership with two different types of business owners. These types include
a general partner and a limited partner. General partners manage the business and face unlimited
liability. Limited partners invest money but have limited decision-making power.
• A limited partnership allows each partner to restrict their liability, which depends on the amount of
their initial business investment. Not every partner benefits from this limitation. At least one participant
must accept general partnership status. This exposes them to full personal liability for the business’s
debts and obligations. The general partner retains the right to control the business. The limited
partner(s) do not take part in management decisions. Both general and limited partners enjoy business
profits.
• The Internal Revenue Service (IRS) sees limited partnerships as separate entities, so it has its tax status.
Business taxes get passed to individual partners. There is no double taxation. This form of business is
common for professional services and startups.
5
LIMITED LIABILITY PARTNERSHIPS
• Limited liability partnerships (LLPs) are like limited partnerships, but they give some liability protection
to all partners. LLPs keep the tax advantages of the general partnership form. At the same time, they
offer some personal liability protection to the participants. In an LLP, business owners have protection
against business debts. They’re still responsible for their actions.
• Individual partners in an LLP are not personally responsible for the wrongful acts of other partners.
They are also not responsible for the debts or obligations of the business. This is a favorite choice for
professional services, like lawyers or doctors.
• The LLP form changes some of the fundamental aspects of the traditional partnership. As a result,
some state tax authorities subject LLPs to non-partnership tax rules. The IRS views these businesses as
partnerships. They allow partners to use the pass-through technique for taxation. Partners in LLPs
report their earnings on personal tax returns. This helps avoid the issue of double taxation.
6
GENERAL CORPORATIONS
• General corporation is the most common type of corporation. In many situations, a
general corporation, often referred to as a stock corporation, open corporation or C
corporation, is recommended when a company goes public or plans a private offering
of stock.
• General corporation is made up of multiple types of members, each with their own
level of authority in the business: shareholders, the board of directors, and officers.
Each has a different level of authority in the company and serves a different leadership
role. Shareholders vote based on stock ownership to make significant corporate
decisions about the direction of the company. Directors manage the company on a
macro-level in the best interests of the shareholders. Officers are the lowest of the three
tiers and manage the day-to-day work of the corporation on a micro-level.
7
LIMITED LIABILITY COMPANY
• An LLC, or limited liability company, is a business entity type that allows
business owners to take advantage of the taxation of a sole proprietorship
and the liability of a corporation.
8
LEARNING ACTIVITY
• , Winnie and Ralph asked you to assess several business structures and their characteristics, advantages,
and disadvantages for Clean. Those structures are:
•
General Partnership
•
Limited Partnership
•
Limited Liability Partnership
•
General Corporation
•
Limited Liability Company
• Evaluate and synthesize this information, and do the following two things:
1. Chart You Need to Prepare: Create a comparison matrix showing the five types of business structures
and comparing and contrasting each type of business structure.
2. Write report as directed.
9
FINAL PROJECT
• There will be 1 single report with subheadings for each Clean employee: Conner,
Denise, Larisa. and Sam. Each subheading should include the following:
•
•
•
10
Identify the component that is central to each of the four scenarios and explain the
relevant area of the law.
As a general matter, explain why understanding the area of the law helps Clean.
Identify Clean’s rights and liabilities in the area of the law and make specific
recommendations of how Clean can minimize its liabilities.
