The Law of Enterprise Organization Assignment Example | Topics and Well Written Essays - 2000 words

The Law of Enterprise Organization - Assignment Example This is then followed by a discussion of the pros and cons for each investor and for the business as a whole with a focus on Limited Liability Company, Limited Liability Partnership, and â€Å"S" and "C† corporations. Discussion Sole proprietorship In Massachusetts there are no statutory requirements governing the creation of a sole proprietorship. Hence, a sole proprietor interest in the business is represented by the assets of the business, and he or she is not considered as a separate legal entity, in particular for federal income tax. Therefore, every income, loss, credit and profits are taxed under the owner marginal tax level. The other major reason why sole proprietorships cannot benefit this group is that they will each be completely liable for the responsibility of the business to the degree of his or her individual and business assets. Every personal assets committed to the enterprise can be seized to make payments. Even though homeowner insurance can help in excludi ng liabilities arising in the course of the business transaction, they will still need further riders and policies (Griffin 2). Given that the owner of any sole proprietorship is in complete and absolute command of the business such a structure would not work in a group like this due to dissimilar vested interests, ideas, and contributions. General Partnerships General Partnerships would not work very well for this group since the partners would be liable for the debts as well as obligations arising from any wrongful acts by another partner. Specifically when that partner performs during the commonplace itinerary of the business or otherwise acted with the say-so of other partners. This group comprises ambitious people who have their own idea on how to run the business with each seeking to be more active in the management. Hence, any business debt or liabilities due to one of them implies that they will be liable for the risk also as they are legally tied. Therefore, it is going to be difficult to create lasting trust (Miller and Jentz 530). Limited Partnerships Based on the stipulations of Chapter 109, section 2 of the Uniform Limited Partnership Act, a limited partnership would not work very well for this group since it would imply some members possessing minimal level of control and rather limited liability and the one who is active will be liable for any debt or obligation. For instance, to Charlie such a structure would imply him having minimal control of the business since he would not be active, even though he has contributed significant amount of capital and clientele and publicity. Furthermore, the fact that one general partner responsible for running the partnership implies that he or she will be responsible for debts plus liabilities beyond the sum of their contributions, and this would definitely make it hard for any of them to accept to be a general partner, as it will be a great risk on their part. For Leila this would entail placing her parentsà ¢â‚¬â„¢ retirement and property at risk and Andrew and Indira would lose a lot in terms of their contribution, in particular Indira who is willing to mortgage her house as part of her capital contribution (O'Neill and Warda 14). Limited Liability Partnerships Based on the Uniform Partnership Act Chapter 108A, Section 48 one of the key benefits of Limited liability partnerships is that, there is a