Businesses vary in size depending on the structural formation followed in the development of businesses. This is because, some require more input than others. For this reason, the structures of businesses are termed as the foundations of how big the business will grow and expand over a certain period. Despite the size of any business, there are set guidelines followed in developing the business structures that hold a business together. These include the sole proprietorship, partnership, and corporations.
Sole proprietorship is a business structure set on one individual owning and running an enterprise. This is a good structure for businesses that are not labour intensive or startups with prospects of expanding in the future. The main advantage is that the owner is their own boss and they make all the business decisions independently without involving others. The tax aspects are also favourable since the business owner includes all the business expenses and incomes in their personal tax returns form 1040 (Frey, 2003). Therefore, any losses in the business may offset the income earned from any additional sources. Taxation on the business is once, unlike other businesses. Disadvantage is that one takes all the liabilities of the business and raising the start-up can be difficult.
Partnerships are businesses formed by multiple people and are in two categories. General partnership has partners running the business together thus take up all debts and other obligations together. In limited partnerships, the business has both general and limited partners. Limited partners are investors only in the business while the general partners own and run the business thus assume all liability. The limited partners have no control in the business. The main advantage of a partnership is the tax treatment in that the partnership does not pay tax on its income rather; it passes all profits or losses to the individual partners. The disadvantage is personal liability since the partners are liable for the partnerships’ debts and any accruing financial obligations. They also require more legal and accounting services thus are expensive to start.
Corporations are independent legal business entities, separate from the owners. They have to abide to more rules and tax requirements. Advantage of corporations is that the business owner has protected from any liability since the corporation’s debt does not constitute as the owners. Some of the profits may retain without paying taxes on them (Frey, 2003). The corporation can sell stock to raise money, and it lives beyond the lifetime of the shareholders. Advantage is that it requires high start-up costs and the owners pay double taxes on their earnings.
All states with an exception of Louisiana practice Common Law in dispute resolutions (Cavenagh, 2000). Common law is based on statutory basis, therefore, judges will establish it with the use of written opinions, these go on to become binding in lower courts within the same jurisdiction. Property and businesses are some examples that become the jurisdiction of the states, and as state courts as used as the main sources of common law.
Constitutional law defines the different relationships between the executive, legislature, and judiciary. It defines the hierarchies in power. The constitution within a unitary state will give ultimate authority to one the central legislature thus delegation of power. Statutory law eventually become the basis for statutory law since they are included in the federal code of laws.
Regulatory law also known as the administrative law and defined as the law that regulates all entities covered in its mandate. It is regarded as the opposite of both the statutory and case laws. It has affected businesses across the United States by slowing their growth despite offering protection (Cavenagh, 2000). It protects business against potentially destructive effects that occur due to rapid expansions and changes.
Alternative dispute resolution (ADR) often acts as a means of finding litigation between disagreeing parties. It replaces formal court hearings and acts as a way for parties to settle disputes with or without third parties. ADR are the legal ways of conflict resolution away from the judicial processes.
References
Cavenagh, T. (2000). Business dispute resolution: best practices, system design & case management. Cincinnati: West Legal Studies in Business.
Frey, M. (2003). Alternative methods of dispute resolution. Clifton Park, NY: Thomson/Delmar Learning.