FRED AND SALLY
Subject: Formation of the New Business
Dear Fred and Sally,
In order to get the most out of your business, it is imperative to choose the right structure. Selecting the correct category of corporation for your new venture will enable you to maximize your probabilities of operational and financial success. The commonest types of business entities as described by (Harris, 2016)include:
Limited Liability Companies (LLCs)
- Autonomous legal structures discrete from the owners.
- Aids detach your individual assets from your corporate obligations.
- Taxed in the same way to a sole proprietorship (especially if one possessor) or a partnership (especially if numerous owners).
- No restriction to the number of owners.
- Not obligatory to hold Annual General Meetings (AGMs) or record minutes.
- Administered by functioning agreements.
- Partners remain individually accountable for litigations filed against the entire business.
- Typically no state filing necessary to establish a partnership.
- Easy to start and run.
- Holders report their portion of loss and profit in the firm on their individual tax returns.
- The owner remains individually answerable for charges filed against the entity.
- No national filing requisite to establish a sole proprietorship.
- Easy to initiate and run.
- Proprietor reports occupational profit and loss on their particular tax returns
It is important in your new venture to mitigate any risk which might occur by purchasers using the homeopathic cough syrup. To achieve this, the consumers should be advised not take other drugs such as aspirin since once taken in conjunction with the syrup, there might be severe reactions depending on the concentration of the ingredients.
According to (Gu?nter Bamberg; Klaus Spremann, 2009), an agency is a fiduciary relation which occurs when one party (the Principal) grants another one (the agent) his consent to act on his behalf and is subject to his control. From this description it is evident that Sam’s involvement prior to the formation of the entity as well as his expected role ultimately, create and agency relationship. In this case we can argue that Sam (agent) has full consent to carry out commercial activities on behalf of Fred (principal) such as deliverables and implementing marketing strategies.
The foremost probable real estate issues based on the location of the entity are the zoning laws since they will restrict the category of home-located business which can partake on the property ( Oakland City Planning Commission.; Oakland (Calif.), 2008). For instance, the farm shall be taken as a homestead falling under the domiciliary zoning because Fred’s children have homes situated on the property. The aspect depicts that the zoning laws would impact on the business being established on the property by restricting the parking and delivery, number of operation hours, noises, signage, and the workers. The next possible real property issue is ascertaining to have the measures for a home-located entity on the property. The criteria required to be met for a home-based trade are having the convenient for employees, allowance for development, good approachability, the workforce, and so forth.
The manufacture of Fred’s Syrup on the family managed farm does require an official transmission of ownership rights since anybody who possess the property shall have a say on what happens on the property. It is essential for the family to decide on whether there going for joint estates and a fee simple interest or not (Aaron Perzanowski; Jason M Schultz, 2016). The fee simple interest is the commonest for possessing the real property with the leading portion being the owner who has the sole supremacy to dispose of such belongings interest. This argument, therefore, means that if Fred possesses the property himself then he has the absolute power to do whatever he wants on it without any input from his family members.
The prospective personal property issues in regard to the usage of Sam’s personal vehicle to deliver the business commodity are drafting vehicle policies, vehicle liabilities, and tax penalties of Sam using his private vehicle (John Honnold; Steven L Harris; Charles W Mooney, 2012). The principal possible personal property subject grounded on the usage of Sam’s vehicle is the vehicle liabilities since misfortunes such as accidents can occur. Both Fred and Sam would need to have satisfactory insurance cover in case of any happening when Sam is conducting distributions. The drafting or conscripting of vehicle strategies will aid in plummeting business liability by confining the automobile to the use of the occupational instead of individual use, necessitating the notification of legal drug and alcohol usage, and having a supple program in place.
Through using Sam’s private van for the benefit of the business exposes both parties that is Sam and the business to liability matters which include negligent maintenance of a vehicle ,neglectful contracting or retention, respondeat superior, and negligent lending of a vehicle. The first issue, negligent hiring or retention takes place the moment a party sues another because they blundered in the employing and not sacking the worker involved in the accident. Fred should, therefore, scrutinize the driving history of Sam before he permits him to conduct distributions on behalf of the business.
The probable estate planning concerns regarding to the family farm and business are lacking a plan, conducting it online or DIY instead of using by professionals, as well as failure to examine the beneficiary descriptions or designating of properties ( Lucinda A Low; Patrick M Norton; Daniel M Drory; American Bar Association. Section of International Law and Practice., 2012). The chief probable estate planning issues in regard to the entity and the family farm is lacking a clear plan will depict that at the death the decrees will be determined by the inherence bylaws of the nation of where the farm is situated and it will be allocated among the family members.
The estate planning vehicles available to Fred and Sally should they wish to transmit possession in the entity and family farm, correspondingly, to Sam and Lilly similarly are family limited partnerships and trusts. These will enable Fred and Sally to handover the possession of the occupation to their children as limited partners without mislaying the control of the company. Besides, the trusts shall allow Fred and Sally to convey the interests of the business to their offspring while keeping regulation over the prosperity in the course of their lifetime.
The kind of business entity suggested for Fred’s Miracle Cough Syrup is sole partnership since at the moment Fred solitary needs Sam to be his worker with the prospective to become part corporate proprietor. Fred shall be able to govern the earnings and the administration system for the business.
Lucinda A Low; Patrick M Norton; Daniel M Drory; American Bar Association. Section of International Law and Practice. (2012). The International lawyer's deskbook. Washington, D.C: Section of International Law and Practice, American Bar Association.
Oakland City Planning Commission.; Oakland (Calif.). (2008). Zoning laws, Oakland, California. Ordinance 474-475 C.M.S., adopted February 5, 1935. Text of Ordinances and maps, rev. to March 31, 1946. Oakland, Calif: Tribune Press.
Aaron Perzanowski; Jason M Schultz. (2016). The end of ownership : personal property in the digital economy. Cambridge, Massachusetts: The MIT Press.
Gu?nter Bamberg; Klaus Spremann. (2009). Agency Theory, Information, and Incentives. Berlin, Heidelberg: Springer Berlin Heidelberg.
Harris, L. (2016). Mastering corporations and other business entities. Durham, North Carolina: Carolina Academic Press, .
John Honnold; Steven L Harris; Charles W Mooney. (2012). Cases and materials on security interests in personal property. Westbury, N.Y: Foundation Press.