Analysis of restaurant business
In this case, there are two future partners, Lou and Jose, who would like to open a restaurant and a sports bar where the customers could socialize. The partners also would like to install a large-screen TV around the bar so that customers would be able to watch sporting events. Two partners would like to use the help of Miriam, who would be eager to provide capital in exchange for the percentage ownership.
For this form of business two business entities might be appropriate: partnership and limited liability company. Since Lou and Jose are not likely to risk their personal property for business purposes, optimal form of business entity for their initiative would be a limited liability company. Although registration of this form of company requires more paperwork and is more expensive that establishing a general partnership (Ehrlich & Michael, 2009), the benefits of not having a unlimited liability cover these expenses. A limited liability company should file an annual report every year, and can be taxed either as a partnership or a corporation (Ehrlich & Michael, 2009). General partnership would not be so convenient for Lou, Jose and Miriam, because Miriam would not participate in managing the company, but she might be liable for the consequences of their management; in the case of choosing a limited liability company, such problems would not arise. Overall, a limited liability company combines the management flexibility and pass-thought taxation of a partnership and limited responsibility of a corporation (Ehrlich & Michael, 2009), and it would be a perfect match for Lou and Jose in order to open up a restaurant.
For this business, pass-through taxation according to the partnership scheme would be most appropriate. According to this scheme, the company does not pay income tax, and all profits and losses are passed through to the partners. Thus, the percentage of incomes and losses is included in individual tax return for every partner. If Lou and Jose decide to hire additional employees, the company will also be subject to employment taxes, such as social security and medicare taxes (Ehrlich & Michael, 2009). Income tax withholding and federal unemployment tax will be also applicable in this case. It should be noted that individual partners will be subject to income tax, self-employment tax and estimated tax for individuals.
Regarding other laws and regulations, which apply to this business, such permits as food service establishment permit and liquor license will be required; depending on local regulations, such permits as health permit, occupational permit, signage and alarm permits (Ehrlich & Michael, 2009). If the company chooses to hire more employees, such issues as disability insurance and worker’s compensation insurance will also be involved. The risks associated with restaurant business include product liability risks, various risks associated with workers’ safety, insurance and compensation, and general safety requirements, risks and liabilities (Ehrlich & Michael, 2009). Safety issues might also be associated with the behaviour of fans, and it might be reasonable to hire security guards, at least for important matches. Equipment safety might be an issue to consider, and the risks of fire and crimes (thefts) are significant for this type of business. Thus, Lou and Jose have to consider all these risks and liabilities before opening their restaurants.
Analysis of professional practice
Akiva and Tara are about to be registered as obstetricians, and they would like to cooperate and open a birth clinic together. They do not have a partner or investor willing to participate in their business, and they would have to take a large loan to cover the costs of starting up a business.
The choice of business entity in the sphere of obstetrics is governed by federal and state regulation of companies focused on the provision of professional services. Commonly, business entities available in health care are professional corporation or professional limited liability company (Steingold & Steingold, 2011). Although these regulations might depend on the state, these are the two most common forms of business entity. For Akiva and Tara, it would be optimal to establish a professional limited liability company, filed for taxation as partnership. This form of business entity would allow them to secure their personal property against possible business losses, and at the same time would allow to use the benefits of “pass-through” taxation common for partnerships (Steingold & Steingold, 2011). Professional corporation is not a good choice for Akiva and Tara, because it would involve more expenses and a large volume of paperwork and reporting, while it is most likely that Akiva and Tara do not need the benefits of a corporation at this time.
The procedure of forming a professional limited liability company is similar to that of forming an ordinary limited liability company, but the formation documents have to be reviewed by the state licensing body prior to registration. Filing requirements for the company should also include signatures of licensed professionals as incorporators and certified copies of their licenses. In some states, however (e.g. in CA) the partners would still have to establish a professional corporation (S-corporation, in their case), because state rules prohibit provision of professional services by limited liability business entities (Steingold & Steingold, 2011). Most often, license application should be sent to the commission for the accreditation of birth centers.
Taxes for the professional limited liability company are similar to those for the general limited liability company, including employment taxes and insurance, if the company decides to hire more professionals and/or staff, self-employment taxes and taxes associated with the provision of professional services (this might differ from state to state). The risks of opening a health clinic involve the risks associated with obstetric activities, equipment functioning risks, theft and burglary risks, and general safety issues. It should be noted that professional limited liability company does not limit the liabilities of Akiva and Tara related to their professional actions and the liabilities associated with professional malpractice claims (Steingold & Steingold, 2011).
Analysis of construction scenario
Mei-Lin, who is the hire manager of Surebuild Inc. needs to hire someone to the position of a jackhammer operator, and the requirements of the company include a high school diploma for a successful applicant. There are three applicants: Michelle, 35, with previous experience as a jackhammer operator, who is a high school graduate, but appears to be pregnant, Eric, 55, who is also experienced as a jackhammer operator, but does not have a high school diploma, Felipe, 38 years old, who is also an experienced jackhammer operator, but does not speak English and does not have a high school diploma, and Nick, 23, a college graduate, he is epileptic, and has no experience with a jackhammer.
Among the employment laws which Mei-Lin has to consider, there are general laws associated with US Department of Labor and specific regulations in construction, such as equal opportunity in employment (Grant, 2001), employment nondiscrimination and equal opportunity in construction contracts, regulations on working conditions and safety standards in construction industry (Safety and Health Regulations for Construction) (Grant, 2001). Affirmative action requirements in construction also have to be taken into account (Grant, 2001). Thus, Mei-Lin cannot discriminate against Michelle because she is pregnant, against Nick because he has a disability, and against Felipe because of his nationality.
However, the employer has the right to reject the employees who do not comply with basic requirements. In this case, Mei-Lin has the right to reject candidates who do not have experience with a jackhammer or do not have a high school diploma, as they do not match the requirements. It is recommended to reject Nick’s application basing on these requirements. It is also necessary to consider the condition of Michelle and to determine whether working with a jackhammer might hurt her future child. Most likely, her application will be rejected because of safety threats to the child.
Furthermore, it is necessary to find out how well Felipe can speak English and whether he would be able to fulfill his responsibilities with his current knowledge of English. If it appears that his English knowledge is satisfactory, then he can be considered, provided that he would be pursuing his high school diploma in the meanwhile. If his English would not be sufficient to fulfill his responsibilities, this would be the reason for rejecting his application. Thus, the most likely candidate for this job is Eric, provided that he would be focused on getting a high school diploma in a reasonable time.
Ehrlich, S.B. & Michael, D.C. (2009). Business Planning. LexisNexis.
Grant, B. (2001). Employment Law: a Guide for Human Resource Management. Cengage Learning EMEA.
Steingold, F.S. & Steingold, F. (2011). Legal Guide for Starting & Running a Small Business. Nolo.