Premium Essay

Lit1 Task 1 Wgu Stody Guide

In: Business and Management

Submitted By gfisher
Words 2050
Pages 9
LIT 1 – Task 1 | SUBDOMAIN 310.1 - BUSINESS LAW | Competency 310.1.2: Organizational Forms | | | |

The following report will summarize the key differences between the various forms of legal business entities. The ownership forms covered will include sole proprietorship, general partnership, limited partnership, C-corporation, S-corporation, and Limited Liability Company. Also included will be a brief recommendation of the most appropriate form of ownership for the given manufacturing business. |

Section A- For each of the various forms of business ownership, a brief description outlining the basic impact on the following criteria will be given; * Liability * Income Taxes * Longevity or continuity of the organization * Control * Profit Retention * Location * Convenience or burden
Sole Proprietorship Perhaps the most common form of business ownership, sole proprietorship, is generally the simplest form of business ownership due to the lack of separation between the entity and the individual. While there are positive and negative implications to any form of business ownership, these are generally more exaggerated in the instance of sole proprietorship. The ease of formation and ownership and limited regulation are strong benefits, however, the negative aspects are far greater than in any other form of ownership.
The first negative ramification is the lack of ability to continue the company after the owner either becomes unable or chooses not to continue the business. This may seem like a minor inconvenience, however, it should be considered if the owner would like to eventually leave a legacy to their heirs. The personal liability of a sole proprietorship is perhaps the largest detriment to this form of ownership, as all the corporate assets and liabilities are directly tied to the entrepreneur. With no separation…...

Similar Documents

Premium Essay

Lit1 Task 1 Part a

...Running Head: LIT1: Legal Issues for Bus.Org Task 1 PART A Sole Proprietorship: Is one of the most popular business types in the U.S and also one of the simplest. There is no legal distinction between the proprietor and the business which means it is autonomous. Autonomy can be very beneficial in that it allows for creative expression, freedom and control but also allows for limitless liability for the owner. Liability: Because the business and the owner are one in the same the liability falls completely on the owner. All forms of a business owner’s assets are available to cover business debts. * Income Taxes: All net income from a Sole Proprietor’s company is taxed as personal income. * Longevity/Continuity: Since this business type is autonomous it can only have one owner. Also the business cannot be sold to someone else. * Control: This business type is controlled by the sole. * Profit Retention: The profit earned from a sole proprietorship is all personal. * Location: The simplicity of this business type allows one to be created wherever the business owner is. * Convenience/Burden: The convenience of a Sole Proprietorship is that it can be created just by starting to do business. The burdens can be the lack of other people to help in the ownership of the business. General Partnership: A General Partnership is similar to a Sole Proprietorship in that it still is not a separate legal entity. A General Partnership is formed when two or more...

Words: 1136 - Pages: 5

Premium Essay

Lit1 Task 1 a Wgu

...LIT1 Task A SOLE PROPRIETORSHIP: •         LIABILITY – The owner and the business are considered as one and so the owner has unlimited liability for the business. Therefore the all of the owner’s personal assets, the business’s assets and the business’s future earnings may be at risk. •         INCOME TAXES – All income for the business goes on the owner’s personal income tax returns whether federal, state or local. One advantage of the sole proprietorship is that the business is not a separate entity and therefore is only taxed once on this income, and another advantage is that all business liabilities may be written off as expenses to offset income. Asset depreciation is an example of this. •         LONGEVITY/CONTINUITY – Once the business owner dies, the business is discontinued. He may will the assets of the business to someone else who is then required to create a new entity. •         CONTROL – The Owner has complete control of the business. He can make decisions without having to consult a partner or shareholders. The business owner may assign an employee to make decisions as well. •         PROFIT RETENTION – The Owner keeps all profits from the business and is subject to all losses. Therefore, the owner is allowed to not only recoup his investment into the business, but is also allowed to keep all profits from the business to spend or save as he wishes. •         LOCATION – The owner can simply decide to operate in another state, but must comply with......

Words: 2297 - Pages: 10

Premium Essay

Wgu Lit1 Task 3

...Student I.D. E-Mail: Western Governors University LIT1: Task 310.1.5-02, 11, 13 Situation A: The employee’s FMLA right was satisfied when he was granted the leave by the company. The employee has been employed at the company for two years prior to his request, which clearly fulfills the requirement of working a total of twelve months before the leave must be granted by the company, which employees more than fifty employees. The request for leave was for birth care, which is a valid reason to request FMLA. All of the applicable provisions of the FMLA were adequately met for this particular employee. FMLA grants twelve weeks of unpaid time off and guarantees that the employee will then be able to return to the same job at the same rate of pay. FMLA provisions do not require paid time off as a mandatory action for the company; therefore, the employee cannot expect the company to pay eleven weeks of withheld salary and the company has not violated any FMLA rules by denying that specific request. Situation B: It is apparent the 68-year-old employee is performing his work duties adequately. The employee has an above average rating; therefore, it cannot be argued that his age is affecting his quality of work.  Nothing to suggests that his work does not meet the standards of the company.  This is an example of why the Age Discrimination Act of 1967 is so important and necessary. This given situation is an obvious violation of the Act.   The employee is......

Words: 488 - Pages: 2

Premium Essay

Wgu Lit1 Task 1

...required. LLCs dissolve when a member dies or undergoes bankruptcy. Running a sole-proprietorship or partnership will have less paperwork and complexity. An LLC can be classified as a sole-proprietorship, partnership, or corporation for federal tax purposes.   Work Cited Page Bliss Business and Community Development. (n.d.). Retrieved November 17, 2014, from http://bliss-business.blogspot.com/ How Businesses Are Taxed. (n.d.). Retrieved November 17, 2014, from http://library.skillport.com/courseware/sb/sbLAW0104003001.htm The Criteria That Determine Corporations. (n.d.). Retrieved November 17, 2014, from http://library.skillport.com/courseware/sb/sbLAW0104001004.htm WGU - LIT1 - Template flashcards | Quizlet. (n.d.). Retrieved November 17, 2014, from http://quizlet.com/25484182/wgu-lit1-template-flash-cards/ The memorandum TO: Clients and Friends of the Firm FROM: Nikki Lingo RE: SEC Rule 65243 DATE: November 24, 2014 _____________________________________________________________________ __ I would recommend that an S-Corporation form of business be used in your given situation. By choosing this type of corporation its shareholders are used to pass corporate credit, losses, deductions and income. This is specifically for federal tax purposes. The owner which is you will not be responsible for reporting such losses and income. This is the company shareholders job. They must report such information on their personal tax returns. By choosing......

Words: 3434 - Pages: 14

Premium Essay

Lit1 Wgu Task a

...LIT1 Task 1 Part A (the report) SOLE PROPRIETORSHIP: A sole proprietorship is the simplest, quickest and cheapest form of business to start making it the most popular types for first time business owners. A business owner and a sole proprietor may operate under different names, but legally, they are the same entity. Which leads to one of the biggest disadvantages of becoming a sole proprietor; the owner is responsible for all debts and fault created by the business. One of the major advantages to starting a sole proprietorship is the simplicity behind the formation. There is very little paperwork that needs to be filed at the inception and it takes very little work to keep the business compliant with state and federal laws. Another advantage to a sole proprietorship is taxes. Any money made by a sole proprietor is considered income to the owner. The profit is claimed as income on the owner’s annual tax filings. * Liability: Because there is no legal separation between an owner and the business in a sole proprietorship, the business owner is unlimitedly liable for any debt or fault of the business. Even if the sole proprietorship dissolves, the owner will be liable for the debt. If the debt is not taken care of in a timely manner it will could affect the owner’s credit rating and lead to future earnings being garnished. * Income Taxes: Taxation of a sole proprietorship happens once, at the income level of the owner. Any profit made by the company is considered......

Words: 4431 - Pages: 18

Premium Essay

Lit1 - Task 1

...Legal Issues for Business Organizations – LIT1 Task 1 Legal Issues for Business Organizations – LIT1 Task 1 – Part A The way a business is organized is an important part of the business’s structure. “Different organizations provide different advantages and disadvantages in creation cost and simplicity, ongoing maintenance requirements, dissolution and continuity, fundraising, managerial control, public ownership, tax planning, and limited liability.” The nature of the business being conducted has little to do with the way the business is organized. (Johnson, 2013) Sole Proprietorship: The basic concept of sole proprietorship is that there is no distinction between the individual business owner and the business. To start this type of business, in most cases, one only needs to begin charging money for goods or services. Because of its simplicity, sole proprietorship is the most common business structure in the United States. According to the U.S. Small Business Administration, “over 70 percent of businesses are owned and operated by sole proprietors.” (Beesley, 2013) Following are some of the characteristics that lend both advantages and disadvantages to this type of business organization. * Liability. As sole owner of a business, there is no severability of liability between the business and the individual. Therefore, all gains and losses of the business are also the gains and losses of the individual. The aspect of unlimited liability is one of the......

Words: 2852 - Pages: 12

Premium Essay

Lit1 Task 1

...Lit1 Task 310.1.2-01-06 Part A Determining whether to start or invest in a business endeavor and what kind of business endeavor to choose can be challenging. Through this report the numerous types of business organizations will be assessed. By the end of the report you should have a greater comprehension of the different choices available. * Sole Proprietorship: To start off it is essential to have a clear understanding of what sole proprietorship means. As the sole proprietor you are the owner and the operator of that business. In more detail, the sole proprietor manages everything including setting up the business. An attorney is only needed if the sole proprietor plans to report the name of the business under a name other than their own. In that instance they would need to register the business with the government. * Liability: A full understanding of all liability and where it falls is very important. All liability falls on the owner on the company. This means that not only all of the company’s assets but also the owner’s personal belongings possibly will be occupied in any scenario where the company fails. More specifically, in the event that the company flops because of unfortunate market settings, poor business policy or if there is an injury suffered implicated by company products. The liability falls on the owner of the company including all characteristics of the business and can be brought into any legal actions. * Income Taxes: As a sole......

Words: 2781 - Pages: 12

Premium Essay

Lit1 Task 1

...Lit1 Task 1 Organization of Business Sole Proprietorship: Most common form of business today. Legally speaking the sole proprietor and the business are one in the same. Any legal issues such as law suits and tax liabilities are the same and the sole responsibility of the owner. There is no autonomy, no differentiation between the business and the owner. If the business gets sued, it is the personal assets of the business and the owner that are in jeopardy. It is also the easiest form of business to start and to end. A sole proprietor needs to obtain the appropriate licenses for the state and/or municipality in which they wish to do business then, they are up and running. All revenue is personal revenue for the owner. Any bills are paid by the owner. The business can be closed as easily as it was opened. Just stop doing business. The business cannot be passed on to anyone, when the owner dies the business dies. Any loans needed to do business will be in the form of personal loans from a bank since the business and the owner are one in the same. The owner’s credit worthiness is the businesses credit worthiness. Since the owner of the sole proprietorship and the business are one in the same, there is no need for agreements or contracts. General Partnership: Unlike a sole proprietorship, a general partnership is formed with an agreement between the parties involved. General partnerships are formed when two or more people agree to open a business......

Words: 1951 - Pages: 8

Premium Essay

Lit1 Task 1

...LIT1 Task 1, Part A Sole proprietorship: A sole proprietorship is an inexpensive and easy to form business organization. This entrepreneurship gives the owner the ability to have flexibility in their schedule. The business owner of this organization will benefit from having full control and retains all the businesses profits. Negatively, the business owner is also personally responsible for all the debt. and liability the business may take on. In this organization if the owner dies, the business dies also. • Liability: In a sole proprietorship the owner is personally responsible for all of the liability, including all debts. and obligations. The Sole proprietors personal assets are unprotected if the company “goes under” and there are unpaid debts. • Income taxes: In a sole proprietorship federal income taxes are filed as an individual would and Income taxes are submitted on the business owners’ personal income tax return. In this organization the percentage of taxes paid are typically higher. • Longevity or continuity of the organization: A limitation for growth in a sole proprietorship is that it does not allow financial investors thus, leaving the business owner to rely on his/her personal finances. In this organization if the owner dies, the business dies also. • Control: The business owner has all the control associated with the business. The business owner can set up the company as he/she chooses. • Profit retention: The business owner in a......

Words: 2555 - Pages: 11

Premium Essay

Lit1 Task 1

...LIT1 Task 2 Part A: The Form | Sole Proprietorship | Description | A sole proprietorship is a type of business where there is no legal distinction between the business and its owner. This is the most common form of doing business in the United States ( Terence Lau and Lisa Johnson, 2015) | Two Advantages | There are many advantages to this type of business. First it is easy to create a sole proprietorship. The entrepreneur in charge simply starts the business. Another advantage is autonomy. The owner is able to decide what they want to do with the business, concerning hours, rules, and regulations and decide all of the factors needed to run the business. ( Terence Lau and Lisa Johnson, 2015) | Two Disadvantages | There is also some disadvantages to a Sole Proprietorship. Firstly there can only be one owner, so it is not possible to bring other in to the business. If the owner dies, then the business dies as well. Another disadvantage is raising the working capital for the business, especially to start the business. Without the capital it is difficult to expand the business and produce profits (Terence Lau and Lisa Johnson, 2015). | Liability | In a sole proprietorship the liability feature is an unlimited liability. This means that there is no different between the owner and the business, so the owner is liable for all of the debts and obligations of the business. If the owner runs into financial difficulties, he or she is personally liable to pay these......

Words: 3296 - Pages: 14

Premium Essay

Lit1 Task 1

...September 15, 2014 Lauren Tierman Western Governors University ltierman@my.wgu.edu Student ID: LIT1 Task 1 –Labor and Employment Law Situation A: Details * Employee A has been with Company X for two years. Employee A was given leave in order to be with their spouse and newborn. * Employee A took FMLA leave for 11 weeks. Upon returning to work, the employee wants to be paid for the time they took the leave. The previous department manager left the company during Employee A’s leave. * The new manager has agreed to place employee A in an equivalent position and pay but will not pay the employee for the 11 weeks of leave. Key Provisions and Outcome The Family Medical Leave Act refers to public and private companies, and companies that have 50 employees or more. The FMLA states that employers must give an eligible employee up to 12 weeks of unpaid leave each year. (Perez/ Department of Labor, n,d.). In this situation employee A worked at company X which has over 75 employees and took 11 of his allowable 12 weeks in accordance to FMLA. In accordance to FMLA, an employee must have worked for their employer for 12 months and must have worked 1250 hours. The employee can take FMLA for the birth and subsequent care of a newborn child. (Perez/ Department of Labor, n,d.). In this situation employee A had just recently experienced the birth of a newborn child and worked at Company X for two years. The FMLA allows for employers to......

Words: 964 - Pages: 4

Premium Essay

Wgu Egt Task 1

...EGT Task 1 A. Profit maximization can be calculated from the following 2 approaches: 1. Total Revenue to Total Cost (TR/TC) approach a. Total revenue is calculated by multiplying price times quantity (TR = P x Q) b. Total cost can be calculated a variety of ways, i.e. fixed (TFC) and variable (TVC) costs and also capital and labor composition costs (TC = TFC + TVC) c. Profit is total revenue minus total cost (TR-TC) d. In order to maximize profit, need to find largest gap between total revenue and total cost (TR & TC) 2. Marginal revenue to marginal cost (MR/MC) approach a. Instead of looking for the largest gap in a profit maximization direction, you need to equate marginal revenue is equated to marginal cost (MR = MC) b. The term “Marginal” means next incremental unit c. Marginal revenue is the change that takes place in total revenue divided by the change in quantity (MR = ∆TR/∆Q) d. Marginal Cost is the change that occurs in the total cost divided by the change in quantity (MC = ∆TC/∆Q) B. The calculation used to determine marginal revenue is MR = ∆TR/∆Q, where MR = Marginal Revenue, ∆TR = Change in Total Revenue and ∆Q = Change in Quantity. 1. Marginal Revenue increases when Company A goes from producing no widgets to 1 widget. 2. Marginal Revenue decreases when Company A produces 2 or more additional widgets, which is indicative of a monopolistic market. 3. Marginal Revenue remains constant only when there is a perfect (pure)......

Words: 825 - Pages: 4

Premium Essay

Wgu Lit1 Task 1 310.1.5

...2011). Taking into account the information provided in Situation C, we are able to infer the only limitation of the disabled individual is the ability to move freely through out the company’s multi-floored headquarters due to being unable to utilize two of the four available elevators. The argument could be made that being able to use the two accommodating elevators should be sufficient, but let us consider the possibility that certain elevators don’t have access to all floors. This would limit the applicant’s ability to perform their required duties. Upon that determination, it becomes necessary for the company to make alterations to the elevators to make them compliant with the applicant’s needs should a job offer be made. The remaining task is to determine whether the required alterations to the elevator place an undue hardship on the company. Considering the company’s number of employees, comprising over 75, and the size of its seven floor headquarters, it would stand to reason the required revenue the company must generate to maintain this level of achievement would be substantially more than the $2,000 required to modify the two out of compliance elevators preventing Applicant C from becoming a productive member of the company. Even if the one day down time of the elevator under repair were a determining factor, the company would have the three remaining elevators available to continue daily operations with minimal inconvenience to the other employees. Considering the......

Words: 2008 - Pages: 9

Premium Essay

Lit1 Task 1

...LIT1 Task 1 Situation A: The Family and Medical leave act provides employees leave for up to 12 weeks. The leave is unpaid but their job is protected. The employee must have worked with the employer for a minimum of 12 months and working at least 1250 hours. They must also be employed by a company with 50 or more employees. In situation A, the manager was correct in allowing the employee to return to work at his previous pay rate. The employee worked at least 12 months and took only 11 of the allowed 12 weeks off. This also involved the children of the employee. Since FMLA doesn’t guarantee compensation during this time, then the employee is not entitled to back pay for the eleven weeks that he was not at work. Situation B: The Age Discrimination Act in Employment of 1967 is a ban against age discrimination. There are specific bans on age discrimination in areas of hiring, wages, promotions, and layoffs. This act prohibits marketing jobs to a specific age group or denying benefits due to employee age. It also prohibits mandatory retirement at a certain age. In situation B, the employee B received an above average review on a recent performance evaluation. Employee B is 68 years old and has been employed with the company for 42 years. Employee B was denied a job promotion. A job promotion went to his co-worker who was 32 years old and only received an average performance evaluation. Based on his recent above average performance evaluation,......

Words: 315 - Pages: 2

Premium Essay

Lit1 Task 1

...Steve Wood LIT1 - Legal Issues for Business Organizations Task 1 Scenario A The purpose of the Family and Medical Leave Act of 1993 is to offer a balance between the stresses of both work and life. There are three main provisions of the act that are critical to the overall takeaway of what this law means to this situation. First, “Eligible employees can take unpaid, job-protected leave (they can return to their position). When they return from leave, FMLA guidelines require that companies return employees to their former position, assuming they are able to perform the essential functions of that position. If the employee is no longer able to perform his or her previous job, an alternative position with the same benefits, salary, and work hours must be provided to the disabled employee.” (FMLA Online) Second, Their insurance coverage stays as if they had not taken leave, COBRA does not take effect. And, “the leave can be tailored to fit the needs of the individual.” (FMLA Online) The law allows for the employee to take unpaid time to be able to care for his family without the need to stress that there will not be a job waiting with the same pay. The other part about this that is awesome is the fact that the employee’s insurance coverage stays intact without the need to involve COBRA. This law can also be tailored to the needs of the individual. If they need to have a continuous full 12 weeks, they can; if they need the leave to be split in different blocks of time, they can;......

Words: 1722 - Pages: 7