Business Legal Environment - Essay Example

What are the most obvious advantages of a sole proprietorship is the fact that the sole proprietor has complete and total decision-making controlover the business or entity with which he/she engages. Similarly, there are few formal business requirements were legal documentation that is required with regards to setting up and maintaining a sole proprietorship. This low level of requirement makes entry and into the market quite easy and reduces a great deal of hardship upon the individual with regards to filing requirements tax returns, and decision-making. However, as with any economic decision, there are both costs and benefits to engaging in a sole proprietorship. As such to the disadvantages will now be discussed. The first of these is with regards to the fact that the sole proprietorship is very unlikely to garner any number of investors. This is due to the fact that investors are ultimately leery of investing in the business venture whose decision-making structure and ownership is all concentric upon single individual. Similarly, a secondary drawback is concentric upon the strength that has already been listed; the fact that all responsibilities and business decisions necessarily fall upon the shoulders of the sole proprietor. As such, sole proprietorship oftentimes places an undue level of stress and anxiety upon a single individual and therefore makes it impossible for him/her to both manage the business and maintain any semblance of a normal life. 2. With regards the advantages of a corporate business entity, the first of these is with regards to the fact that it is much easier for this entity to gather and raise money from investors. Due to the fact that a pooling of capital and/or property can be rapidly affected within such a means, it is likely that such an entity will be able to garner a relatively higher level of investment as compared to the other entities thus far discussed. Likewise, a secondary advantage of the Corporation is that unlike the sole proprietorship, the individual shareholders are not personally liable for any debts that the corporation might incur during its operation. Conversely, one of the distinct disadvantages of the corporate business entity is with regards the fact that it is liable for a double taxation. The reader can understand this to mean that the profits of the Corporation are taxed as well as the individual shares that the stakeholders earn as a form of dividends/payments/salary. A further disadvantage is with regards to the fact that not all stakeholders will have an equal share with regards to a voice in how appropriation is wrong. As a function of the fact some shareholders will have a much stronger voice and level of ownership, their decisions will be taken much more seriously than those with a lower level of ownership or shares. 3. With regards to piercing the corporate veil, this most directly refers to the legal decision and ability to assume that the rights or duties of incorporation are also the rights and duties of its stakeholders. In this way, the reader can understand why a corporation is typically viewed as a separate legal person; completely and entirely responsible for the debts that it incurs as well as the credits that it is owed. Ultimately, the decision to understand the Corporation as a separate person is only pierced when an exceptional situation arises that forces the law to consider the Corporation in a non-personhood manner. More often than not, litigation with regards to piercing the corporate veil is generally concentric upon the level and extent to which wrongful conduct, proximate cause, or unity of interests might have been violated within the initial startup or subsequent actions of the Corporation. Similarly, as was briefly discussed above with regards to the disadvantage of entering into a corporate entity, the double taxation standard will be briefly discussed below. Firstly, whereas a sole proprietorship only allows for the individual to be taxed upon their earnings, the Corporation, regardless of its size and the number of stakeholders, is taxed both as a corporate person, and with regards to the individual earnings of the stakeholders/employees that are involved within the enterprise. In such a way, this serves to be as something of a discouragement with regards to beginning of Corporation due to fact that a sizable level of income/potential income generation is lost each and every year with regards to the double taxation that takes place on earnings. 4. The particular business in question that this individual would like to start for this case study is that of a construction business. As with any business, a particular level of startup capital will be required in order to make the construction firm viable and desirable to the market. As a function of this, equipment will need to purchase, licenses will need to be earned, and employees will need to be hired. However, the fact of the matter is that with regards to the overall level of investment that is required, the construction firm will not necessarily require such an injection of capital that it will be required that other individuals besides the owner will need to invest. As a function of this, it is the understanding of this author that the construction firms needs will best be suited within a structure of a sole proprietorship. Additionally, due to the fact that double taxation of any type of incorporation would necessarily reduce the meager profits earned in the first two years, the sole proprietorship is an even more attractive option with which to engage. Similarly, due to the fact that the business will necessarily start small and seek to grow its customer base as well as level of employees, is in the best interests of the owner manage each of these groups strategies within his own unique way; without being disturbed by or influenced by stakeholders who wish to maximize immediate profits rather than to see the long-term potential that such a business can generate. 5. The five factors with regards to how the courts consider a determination of whether a person is an employee or an independent contractor are as follows: behavioral control, financial control, type of relationship, level and extent of contractual obligations or agreements, as well as common law attributions of the relationship. The first of these is with regards to the behavioral control that an individual might display with regards to the decision-making structure and means by which the entity chooses its directional focus. As such, if an individual proves that he or she has little to no decision-making/behavioral control with regards to the way in which the entity develops, it is likely the relationship can most clearly be defined as that of an independent contractor. Similarly, one of the most important factors to weigh and analyze is with regards to the level of financial control. Whereas an employee by very definition has a level of financial control within the firm/entity in question, the private contractor most certainly does not. In such a way, the courts regularly review documentation and analyze the level of financial control to which the individual displays as a means of determining whether or not they are employee or an independent contractor within the case in question. Likewise, another determination that is made based upon whether it individual can be considered an employee or an independent contractor is with regards to the type of relationship that is displayed within the given situation. Naturally, this is one of the most subjective determinants that exists; however, it nonetheless holds the court to determine whether or not an individual is an employee should be considered as an independent contractor. Additionally the level and extent to which contractual obligations or agreements are on the books must also be considered as a means of determining whether or not individual is an employee or an independent contractor. Similarly, this is one of the most objective measurements by which the documentation and relationship can be determined and find. Lastly, common law attributions of the relationship will be weighed and analyzed. 6. The doctrine of respondeat superior is with regards to allowing an employer be held responsible for the actions or determinations that he/she has made upon the employee within the course of their employment. Ultimately and Latin, phrase means “let the master answer” accordingly, this brief response will analyze for of the determinations courts seek to draw inference upon as a means of determining whether or not a tort was committed within the scope of agency/employment. The first of these is with regards to whether or not the act was committed within the time space limitations that the employer engaged interaction with the employee. Lastly, the courts attempt to decide whether or not the offense was criminal in scope were merely had/has a civil liability. 7. The first exception to at will employment is with regards to what is known as the public-policy exception. In this particular exception employer is not about to fire were dismissed an employee that may do something with regards to a learning the authorities suspect to unlawful or unsafe practices the firm or agencies engaged with. A further exception exists within what is known as the implied contract exception. In such a way, in a situation in which an implied contract exists between employer and an employee, at will employment is no longer viable route employer dismiss employee. Similarly, a covenant of good faith and fair dealing exception adds a new level of nuance the means by which an employer can choose to terminate the employee – employer relationship. 8. Although the terms may seem eerily similar, the fact of the matter is that disparate treatment discrimination and disparate impact discrimination occurs in different cases. As such, disparate treatment is when an employee raises claim for your has somehow provided exhibited differential treatment with regards to the other employees that were in similar situations at the specific job stop comparatively, disparate impacts termination is defined as a situation in which firing, promotion, hiring, hey, and other employment decisions necessarily have a greater impact upon one group than another. 9. Although employment discrimination is almost always seen as a net bad, the fact of the matter is that there are three defenses that employers normally seek to invoke regards to this. The first of these defenses is known as business necessity. Within such a defense, the business seeks to relate how the action or actions that they committed with regards to the type of perceived employment discrimination is with regards to what requirements of the business and other such decisions that it been made within the past. This two-part determination is an absolute necessity for the business to be able to utilize such a defense. Second, defense is what is known as the “bona fide occupational qualification”. Within this type of defense, the employer seeks to defend itself based upon the fact that it was somehow ineligible and impractical to hire the particular employee/employees in question did the fact that they cannot be the requirements that the occupation reference; also known as a bona fide occupational population”. Read More