Incorporation is Effective and Allows the Business to Raise Revenue - Essay Example

?Ellen and Roy are registered nurses. They want to start a retirement home for elderly patients who need nursing care. They plan to be in business for 10 years, until Ellena€™s husband retires. Identify the reasons why incorporation is an effective idea for their business, the steps they must take to incorporate their business, and the steps they must take to dissolve the corporation once the 10 years has passed. Incorporation is effective because it allows the business to raise revenue, facilitate ownership of transfer, and has tax advantages. In order to incorporate a business, first the business should be given a name. Secondly, one must determine who will register the company in the state where the business is. Third, organize the structure of stocks and dividends distribution. Fourth, select board of directors and file for Employee identification number. Certain steps for dissolving a corporation: First, the corporation board members meet and collaborate to dissolve incorporation by selling stocks and filling the 966 forms with the IRS. Second, inform the creditors so they can request claims. Third, sell and distribute any assets to shareholders. Lastly, fire articles of dissolution. a€? Tom inherited his fathera€™s landscaping business and incorporated the business after he read an article in Lawn News advising landscaping businesses to incorporate. Tom has been sued by a customer, whose prize rose bushes were accidentally damaged by one of Toma€™s employees. Tom called an attorney friend, Hector, to represent him in the lawsuit. When Hector asked to review the corporate minutes, Tom said, a€?what corporate minutes?a€? Hector advised Tom that his personal assets could be taken if he lost the suit, but Tom said, a€?no, dona€™t worry! Ia€™m a corporation; I have no personal liability!a€? Is Tom correct? Identify and discuss the legal principle that would be applied by a court to resolve this issue, and explain whether Tom would be found personally liable. Support your conclusions with information from the text. Although his business is incorporated, Tom can still lose some of his personal assets. Tom would not be personally liable since there is limited liability due to incorporation. The legal principle that would be applied is the fact that it’s a LLC and a LLC allows business to enjoy certain rights under the federal guidelines. A LLC protects a person from getting their personal assets taken away, his assets of the company will be in danger. The court will first investigate the matter, and then the matter of meditations and negotiations takes place. The court may close the LLC for a fee and analyze the allocation of assets that the plaintiff deserves. a€? Susan, Dave, and Marvin are society hair stylists, who make a very good living. Because they are all in so much demand, they decide to open a business together. They form a Limited Liability Company, through which they operate a hair salon called Fabulous Hair, LLC. Each contributes $10,000 to the business. One day Marvin calls in sick, and Susan and Dave work double duty trying to keep up with Marvina€™s appointments and their own appointments. Dave forgets about one of Marvina€™s clients and leaves chemicals on her hair too long, which causes serious chemical burns. The client sues for damages and recovers a judgment in the amount of $75,000 against Fabulous. Discuss the extent to which each member of the LLC may be held responsible for the clienta€™s damages. Support your conclusions with facts and information from the text. Be sure to cite to your sources. Since the company is LLC, everyone is accounted for the share that they put up in the corporation. Susan, and Marvin will have liability of $10000, but since Dave left the chemicals, he will personally liable more than his partners since it was his fault. Susan and Marvin are not responsible for Dave’s work and hence should file a motion to dismiss the notion. A LLC protects the assets of another employees even if the another employee does something wrong. In essence, Susan and Marvin wont have to worry about their personal assets. a€? Paul and Rachel Anderson love to eat at Burgerville, a nationwide chain of fast-food restaurants. They love it so much that they purchase a Burgerville franchise from Burgerville, Inc., and are successful right away. One day, supermodel Olga X enters the restaurant with her children. Olga slips on Super Secret Sauce, a Burgerville treat that someone spilled on the floor. Olga slides across the floor and hits her face on the jukebox, which causes permanent injury to her famous face. Her attorney files suit against Paul, Rachel, and Burgerville, Inc. List the rights and obligations arising from the business relationship between the Andersons and Burgerville, Inc. Will Olga recover a judgment against all the parties she has sued? Explain the legal and factual reasons for your answer. No Olga will only recover from Burgerville, the store itself. Paul and Rachel since are the owners, will have to pay for certain injuries, but they will be limited. Buying a franchise in essence means to buy a security. Here, the concept of Actual and Apparent agency become vital. Assuming this is an apparent agency that Paul and Rachel signed off, which means that their store is independent owners. Hence, Olga can only recover damages from Burgerville since Paul and Rachel were not liable for the misplacing of the sauce. Works Cited LLC. (2011). In Encyclop?dia Britannica. Retrieved from http://0-www.britannica.com.lrc.cod.edu/EBchecked/topic/1233102/LLC Read More