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Summary Of Kelly Santini Llp's Legal Considerations When Starting A Business

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Kelly Santini LLP’s webinar, Legal Considerations When Starting a Business, discusses three major forms of business entities: sole proprietorships, partnerships, and corporations.

Sole Proprietorship

A sole proprietorship is an unincorporated business run by a single individual with a view to profit. There is no legal distinction between an owner of a sole proprietorship and the business. While the business can have employees, the owner cannot be an employee, nor can he or she have any partners. If the business will be a name other than the legal name of the business owner, the owner will need to register the business name under the Business Names Act and obtain a Master Business Licence. This licence must be renewed every five years. In …show more content…

A partnership does not have to be in writing for a general partnership, although a Partnership Agreement is recommended. Partners are the owners of the firm; however, the business is not a separate legal entity. If the name of the business is anything other than the legal names of the partners, then just like the sole proprietorship, the name must be registered under the Business Names Act and they must obtain a Master Business Licence, to be renewed every five years. There is no business tax rate; income flows to the individual partners and each partner pays a personal tax rate. Partners are agents of one another and have a duty of loyalty and good faith to each other. In addition, they are jointly and severally liable, meaning they are liable for the debts of the partnership.
A limited partnership has at least one general partner, who has unlimited liability, and one limited partner, whose liability is limited to the amount of capital the limited partner invested in the business. The limited partner, also known as a silent partner, shares in profits on a proportionate basis, but they are unable to take part in the management of the business. Unlike a general partnership, a limited partnership requires a partnership …show more content…

The owners are shareholders, who own shares, not the property of the corporation. A corporation can be incorporated either Federally or Provincially and the corporation can either register a name, after performing a Nuans Corporate Name search (to avoid choosing a name that is already taken) or take the assigned number upon incorporation. Performing a Nuans search is slightly lengthier and expensive process; however, provides more identity than a number

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Partners are the agent for each other with respect to the conduct of the business which means an individual partner can incur an obligation for which all the other partners are also responsible; 2.

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This can be avoided as if the owners have most of the shares with him then he can make the main decision as he holds most of the businesses shares whereas others hold little amounts of shares. One disadvantage of public limited company can be there are many legal formalities to start a public limited company. RSPCA: RSPCA is a charitable trust and the type of ownership is charitable as is it non-profit because the purpose of this business is to generate funds in order to support animals and people for a good cause. There is no liability for public sector as the business is funded by the government.

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Unlimited liability This is the concept that if the business is unable to pay off outstanding debts then the owner/ owners will be forced to sell off their private assets in order to pay off the debt. The two types of business that are susceptible to this are sole traders and partnerships. Limited

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Jeb and Josh Arcadia Sports business seemed like a good idea until Jane a customer of Josh's white river rafting suffers a concussion while damaging her spine and Jeb's wind farm shut down due to government regulations. Seemingly, in such instances, friends should not go into business with one another. That is because two friends beginning a business surpasses the sole proprietorship with one owner or a married couple to a general partnership with two or more individuals that share equal profits, debt, and liability of the terms of the contract (Kubasek, Brown, Dhooge, Herron & Barkacs, 2017). The drawbacks to the general partnership compared to the sole proprietorship are that one business owner could lose monies and reputation due to the failure of performance from the other business owner.

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General partners will bear personal liability for the partnership’s obligations, liabilities, and debts. Partnerships can be expensive to establish versus sole proprietorships because of the additional legal and accounting services. A limited partnership would be a recommendation to Painted Images with an agreement being developed due to the amount of investments provided by each investor. There should be a detailed description of how the business decisions are to be made, how disputes will be resolved, and the mangement role of the owner with unlimited

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Unit 5: Understanding Business 1.2. There are three different types of business structures and each has its own responsibilities, they are private, public and third. Businesses that are in the private sector are a sole trader so the owner is responsible for all activities that are run within the business and has unlimited liability for debts, however as they are sole traders they are often able to set up a partnership and share skills but that also means sharing profits. Businesses in the public sector are governmental departments, this includes ministerial departments who implement government policices, non ministerial departments who are run by a board and are not linked to any political parties and finally agencies, these are non governmental agencies that provide servies to goverment organisations and receive funding from the government. The final business structure is the third sector and this includes charities and organisations that are non profit, trustees and members are responsible for any debts.

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In addition, individual partners are not personally responsible for company debts or other obligations (Bayern, 2016). • The partnership itself is not responsible for paying taxes. The credits and deductions of the company are passed through to partners to file on their individual tax returns. Credits and deductions are divided by the percentage of individual interest each partner has in the company (Bayern, 2016). Disadvantages can come up with certain states and the tax requirement.

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Corporation: A corporation is a legal entity that is separate from its owners, who are shareholders. Corporations have their own rights and liabilities, and the shareholders' liability is limited to the amount of their investment. The advantage of a corporation is its ability to raise capital and transfer ownership, but the disadvantage is its complexity and regulatory

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A C Corporation does not mimic the person who started it. If a person dies in the corporation, the corporation continues. Although, a C corporation is a legal entity that can own property, pay taxes, and be sued. In the event that the business is not successful, a singular person in the corporation is not targeted by creditors or investors who want their money unless a personal guarantee is

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In sole proprietorship and partnerships, the meetings are not compulsory and financial records are only provided when necessary to people like investors or the government. Formation Sole proprietorship is formed when a person starts up a business alone. A partnership is formed when two or more people start up a business and a corporation is formed when a group of people come together and start up a business as a single entity. In sole proprietorship and partnerships, formal documents are not necessarily required but in the corporations, it is mandatory for the business to be registered so that the business can commence.

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This gives owners protection from the business' debts, separating personal and business funds. In an LLC, the owners of the company are referred to as "members", while the people who operate it on a day to day basis are referred to as "managers". An LLC can be managed by all of its members, in which case it would be member managed. Or, it can be managed by a group of managers, who may or may not happen to also be members (owners) of the company.

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I will discuss it further in section 11. - “Partnerships are more likely to succeed than sole

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In Scotland, Premises and Personal Licences are granted by local authority licensing boards, which can set specific opening hours and other conditions. The Licensing (Scotland) Act bans the sale of alcohol as a loss-leader. Premises must have a Premises Manager specified in the Premises Licence. For details go to www.scotland.gov.uk/Resource/Doc/. Who regulates businesses in this area?

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A partnership is an arrangement where parties, known as partners, agree to cooperate to advance their mutual interests. The partners in a partnership may be individuals, businesses, interest-based organizations, schools, governments or combinations. Partnership’ can mean: working together, a collaboration, a business arrangement, sharing on an equal basis, having a common aim, but with own priorities. Partnership working in health and social care brings together separate organisations so that they can benefit from pooled expertise, resources and power sharing. The goal of a partnership is to enhance the efficiency and quality of service provision.

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Also, it happens to be a separate entity from the partners. Cons: Every partner is responsible for their own negligence, misbehavior, etc. While every partner is responsible for their actions, if someone under them makes a mistake the partner takes the blame for that also. Not to mention, LLP is only available for specific occupations.

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