Business Entities, Laws, and Regulations

Business Entities, Laws, and Regulations
Regina Holmes
October 24, 2011
G. Alan Williams

Business Entities, Laws, and Regulations
      An entrepreneur or entrepreneurs interested in starting a business must not only consider what type of business to operate but also the entity, laws, and regulations the business and owners become subjected to based on its operation. In a sole proprietorship the owner is personally liable for his or her debts as there is no separate entity between ownership and personal assets. As a sole proprietor the owner must file profit and loss as part of his or hers personal tax return. In a general partnership personal liability is divided among each partner with any profit or loss filed as part of each partner’s individual tax return. A limited liability company maintains a separate entity and its members remain harmless against any debts and liabilities beyond his or her capital contribution (Cheeseman, 2011). Based on the election of being taxed as a corporation or partnership each member must either file profit or loss on their individual tax returns or taxed as a corporation. Like a general partnership and limited liability company, a corporation operates as a separate entity with its owners bearing limited liability up to his or her capital contribution. Operating as a corporation benefits the owners by carrying no personal liability as well toward company debt or against personal assets.
      Restaurant/Bar Business Entity
      Collaborating together to open a restaurant and sports bar Lou, Jose, and Miriam should establish a limited liability company as the best operating entity option. Miriam, as the silent investor, stands the opportunity of making a profit based on her established percentage in ownership.   Entering into an operating agreement, either oral or written, records the percentage of ownership each member maintains. As the primary investor, Miriam has the option of requesting a higher ownership of...