Tinker & Tailor’s Home Security Service, LLC (LLC) The businesses are being sued

Question

Tinker & Tailor’s Home Security Service, LLC (LLC)

The businesses are being sued for breach of contract. Create a matrix that lists each business, and compare and contrast your personal liability exposure as an owner as a result of the lawsuit.

For each business entity, analyze how you might limit your liability exposure as an owner.

Describe a business that you may own some day or that you currently own. (Even if you never plan to own a business, pretend as if you will do so for the purposes of this assignment.) Examine the best business organizational form for the business that you have described, including in your examination personal liability exposure, management, taxation, and ease of formation.

Explanation / Answer

Matrix:

For each business entity, analyze how you might limit your liability exposure as an owner:

Sole proprietorship - Liability in a sole proprietorship can be limited or minimized by ensuring that the business is conducted with due care and by ensuring that all debts and liabilities are paid on time. Title of personal assets can be transferred to family members to protect the personal assets.

General partnership

Security Measures and Safety Controls – the owners have to constantly inspect the real property and perform all required maintenance, cleaning and repairs in a timely manner. They have to correct situations that create safety risks to avoid injuries or damages that may guarantee their liability. If the owners are not sure which maintenance, cleaning or repairs are required for a particular situation, or which situations create risk of damages to the third party, they have to contact their attorney for further instructions or advice. This reduces their liability exposure.

Limited Partnership - Owner of Limited Partnerships is not liable for debts of the company unless he/she participate in control. Therefore to limit exposure to liability, control of the entity must be exercised by the management and not the owner.

Corporation - The best way the owner can limit his liability exposure is by obtaining business liability insurance policy. This is an expensive option, but it can protect owners from events that may be financially devastating and put him/her out of business.

Limited Liability Company - As an owner, to limit my liability exposure, I can file a simple formation document with my state, and then I separate the business and personal debts, meaning that my business creditors are unable to go after my personal assets to satisfy debts and judgments of the business.

Describe a business that you may own some day or that you currently own:

The business that I may own is a Limited Liability Company (LLC).

A limited liability company may be member-managed or manager-managed depending on the decision of the owner or the owners if they are many. This means that the owners of the Limited Liability Company are responsible for managing the company in a member-managed LLC. On the other hand, if incase the management is a manager-managed company, this shows that is operated by managers who are appointed to run the company.This type of business entity offers simplicity, flexibility and limited personal liability from business creditors.

Liability exposure.

In this type of business entity, all of the owners have limited liability for the business's debts. Normally, in many states or countries, the business interests of the owners of a Limited Liability Company are protected from the claims of the owners.

Management;

In a Limited Liability Company, management may be;

Member-Managed LLCs - this gives the members the right to manage the business of the entity themselves. Members enjoy the right to participate in the daily activities and operations of the business entity.

Manager-Managed LLCs – in this type of business entity, members can choose to have one or more nonmembers run the company on their behalf. The assigned individual or gathering is considered the LLC director and is given the power to work the organization once a day, including enlisting officers and representatives to handle business exercises. The individuals still settle on real choices, for example, regardless of whether to blend the organization with another undertaking, however they can't meddle with the chief's operation of the business past supplanting the administrator or changing over the LLC back to a part oversaw structure. Individuals in a supervisor oversaw LLC can't singularly tie the organization; just the administrator or an approved delegate can do as such.

Taxation

For tax purposes, a limited liability company is treated like a partnership and is not a separate taxpaying entity. Its Income is reported on the owner's personal tax returns, which may result in lower taxes, and does not require the filing of a separate tax return when there is only one owner. A multi-member LLC can elect to be taxed as a corporation, which would require a separate tax return.

.Ease of formation

To establish an LLC, you must form and register your LLC entity with the pertinent state office, often the secretary of state’s office. You must draft and file articles of associations and pay a compulsory filing fee. Your LLC recording ordinarily illuminates your LLC's name, key office's area, your proprietors' or individuals' names, the normal term of your LLC, and some other state-commanded data. On the off chance that there are two or more proprietors of your LLC, you might need to look for the help of a lawful expert to draft a working assertion which delineates such subtle elements as every part's obligations, capital commitments, and rights to benefits. Setting up a LLC requires more forthright time, cash, and exertion than a sole proprietorship so you'll need to calculate that when choosing which substance is best for you.

References

Name of the business Type of the Business Liability for debts Tinker’s Home Security Service Sole proprietorship Sole Proprietor Tinker & Tailor’s Home Security General Partnership Partners Tinker & Tailor’s Home Security Service Limited Partnership General partner Tinker & Tailor’s Home Security Service, Inc. Corporation Corporation Tinker & Tailor’s Home Security Service, Limited Liability Corporation Limited Liability Company

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