Bus 415 – Business Entities, Law, and RegulationsBusiness Entities, Laws, and RegulationsStacey NicholasBUS/415 Business LawAndrew McAdamsNovember 7, 2011Business Entities, Laws, and RegulationsNew business will create jobs, products, services, and the possibility of economic growth for the area that the business opens. Entrepreneurs open new business on a daily all over the world. An entrepreneur is “a person who forms and operates a business” (Cheeseman, 2010). Entrepreneurs can start a business own their own or open the business to others as investors or co-partners. Most business start out small and those that thrive above and beyond expectations will grow significantly. A new entrepreneur must first decide on the “type of business organization that they want to use, whether it is a sole proprietorship, general partnership, limited liability partnership, limited partnership, limited liability, or corporation” (Cheeseman, 2010). These new business owners must consider factors such as: capital requirements, cost of formation, government restrictions, tax considerations, and personal liability before starting their new business. There are a couple of scenarios that must be evaluated to determine the best suitable business, help to identify laws, regulations, and the risk involved for each scenario.
Restaurant/Bar ScenarioLou and Jose are planning to open a sports bar and restaurant. There intentions are to have a place where customers can socialize and watch their favorite sporting events on large-screen TV’s. Lou and Jose do not have enough capital to start their business. However, they do have a wealthy friend (Miriam) who does not have the time to help with the operations of the business but would like to provide capital to help them start their business in return for a percentage of ownership. Lou and Jose should open their business as an LLC. An LLC is “an unincorporated business entity that combines the most favorable attributes of general partnership, limited partnership, and corporation” (Cheeseman, 2010,).
The Restaurant/Bar Scenario
A couple of guys are working on the restaurant/bar scenario during the summer when the club is looking to open a sports bar and restaurant. They are talking about selling the first restaurant/bar on a large scale and also having a new bar area based on the existing space. While this is not true, it is what will be considered an active opportunity. In addition to this, if the two guys want to make at least $1,000 per night, then they will need to pay for the hotel costs. On top of that, the hotel and restaurant itself needs to be in a high-quality hotel area and be available for all patrons in one place. If one of you are considering moving your current place to an all over one area, then the possibility of having a bar in town and restaurant at a higher cost is a pretty good idea even if the bar owners have not paid for a part-time professional to open their establishment. However, if you are very ambitious for a bar in a area where it will cost an average of $100/night, then you’re probably not going to feel right for less than $100.
Let’s get some things out of the way right away. There is a few issues concerning location and experience which will get addressed in different ways as well. Let’s start with the business plan. Lou and I have several options. I can sell the restaurant/bar to a city or state business entity that I call Franchisees LLC, and I could sell the bar/club area to any state and/or local business. These are not mutually exclusive and this should be a little bit more simple in principle. What makes these options so different is that at least this part is subject to the legal requirements of this business plan. The Business Plan is one of the most common questions we get asked when moving something out of one local or state business entity. How much does the current level of financing cost to make it worth it at the current fair market value, or at the lowest possible price?
What can we do to solve the potential potential problem between now and opening the restaurant / bar and also in the future?
It is clear that all of the above proposals are going to require some time and money. And, like any time-wasting business plan, it will probably take some time to understand exactly what is involved in each and every one of these things. This time, I suggest looking into the very early and early stages of the proposal and looking from a business/business entity perspective.
You can read the Business Plan as follows.
I must make note of the terms of service for which I am offering this partnership. The terms (and the specific dates) are listed in the appropriate paragraphs to the right for both parties. Those terms are intended
An LLC is a separate legal entity and entrepreneurs can form LLC’s only by the laws of the state in which they are organized. An LLC company is regulated in their formation, management, and dissolution. An LLC is taxed as a partnership unless Lou and Jose decide to be taxed as a corporation. One or at least two members, depending upon the state that the business resides in, may form an LLC. By law they can only organize their LLC only in the state in which they are doing most of their business, but they can conduct business in other states.
Lou, Jose, and Miriam should create on operating agreement that will