Types of Business Organization Order Instructions: Please read below for information concerning assignment. Support responses with examples and use APA formatting in the paper.
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To support your work, use the textbook, lectures and scholarly outside sources. As in all assignments, cite your sources in your work and provide references for the citations in APA format.
New Business Dilemmas
Read the scenarios and the questions that follow. Identify the legal issue(s) and apply legal concepts and possible arguments for each question. Prepare a solution for each question using laws, cases, examples and/or other relevant materials. Support your answers with information from the textbook and at least two outside scholarly sources. By Saturday, October 22, 2016, prepare a 5 to 8-page paper that identifies the legal issues and potential solutions and answers all questions presented, supported by relevant legal authority. Properly cite all sources using APA format.
This assignment requires the application of the concepts learned in Weeks 1–3 and is worth significantly more than previous assignments.
The Dilemmas
Devon, a resident of Florida, had so many yards to cut each week that he decided running a yard service would be a great way to help pay for college. Devon decided on a sole proprietorship with the name of Yard Tech. Devon printed cards and flyers that listed the services, prices, testimonials, and contact information. Services included year-round yard cutting, mulching, planting, pruning and a variety of other landscaping services.
Devon billed the customers on his yearly plan on a monthly basis. One of Devon’s new customers, Don, sent him a check for $100, made payable to Yard Tech and signed by the customer. Devon took the cash and checks he collected for the week to the bank and found that Don stopped payment on the check.
Devon purchased two new commercial grade string trimmers and one backpack blower online from Wise Sales for $840. Devon acknowledged the terms and conditions, provided his credit card information and selected UPS to deliver the goods. Devon did not purchase any additional insurance. UPS delivered one trimmer and one blower. The second trimmer was missing and the blower was damaged.
Since Devon was a part-time student, he did not have much capital and tried to save money where he could; therefore, he only used one bank account for his personal and business funds. Devon monitored his account once a week using the online portal furnished by his bank, SunTrust. On Friday night, Devon noticed that $252.33 had been withdrawn from his account on two separate occasions on Thursday. Devon knew that he had not spent that amount of money one time, much less two times in one day. He is afraid that someone fraudulently accessed his account. The following Monday was Labor Day and banks would be closed; however, one branch office was open for four hours on Saturday. On Saturday morning, Devon checked his account again and found that a check for $75 cleared the bank. Devon was able to view a copy of the check and noticed the check was written using another party’s name and address using his routing and account number.
Assignment:
Based on the different situations described in the scenario, create a 5 to 8-page Microsoft Word document that includes the answers to the following questions:
1. Is the sole proprietorship the best option for Devon’s business? Select the type of business organization you believe is best for Devon and provide support for your choice.
2. What are Devon’s options related to the stop payment on the customer’s check?
3. What are Devon’s options related to the undelivered and damaged goods?
4. What course of action would you advise Devon to take on Friday night and/or Saturday morning related to the missing funds? Will Devon be liable for the money withdrawn from her account? Explain why or why not. HINT: Outside sources will likely be necessary.
5. According to your text, what laws govern business and consumer banking transactions? Provide a short summary of how the law(s) affect Devon
6. Identify and explain any ethical concerns Devon may face related to the topics covered.
7. Conclude your paper by providing suggestions for Devon to help prevent future occurrences of these types of legal and ethical problems.
Submit the paper in APA format and properly cite sources on a separate page using APA.
Submission Details
Name your document SU_BUS2038_W3_A2_LastName_FirstInitial.doc.
Submit your document to the W3: Assignment 2 Dropbox by Saturday, October 22, 2016.
Assignment 3 Grading Criteria Maximum Points
Analyzed types of business organizations Devon could select for his business. Selected one type of organization and provided support for the choice. 30
Analyzed Devon’s remedies related to the stop payment on the customer’s check. Provided a thorough analysis and description of the options. 20
Evaluated remedies for the undelivered and damaged goods. The report thoroughly explained options based on the scenario. 25
Analyzed appropriate course of action and potential liability for the unauthorized transactions. 25
Evaluated laws related to business and consumer banking transactions and provided a summary of how the laws affect Devon’s business. The report correctly and thoroughly analyzed the relevant laws. 20
Analyzed any ethical issues. 10
Evaluated suggestions to prevent future occurrences of the legal and ethical issues identified in the dilemma. 30
Written components. 40
Total: 200
Types of Business Organization Sample Answer
Types of business organization
There are different forms of business organization that individuals can consider when they want to start a new business. The different types of business organizations include sole proprietorship, Limited Partnership (LPs), Limited Liability Companies (LLCs), Limited Liability Partnerships (LLPs), and corporation. Legal issues, financial matters, personal concerns, and tax issues influence the suitability of the various forms of business organization. The benefit of adopting a sole proprietorship structure is that the procedure is simple and low-priced, compared to other organizational structures. A sole proprietorship does not have to pay corporate taxes and all the profits realized are reported on the business owner personal income tax return. However, the business owners of the sole proprietorship are personally liable for the obligations of the business and actions of the workers representing the business. Furthermore, the sole proprietorship structure has a limited life and ceases when the business owner dies (Twomey, Jennings & Greene, 2015).
One or more general partners and one or more limited partners can form a limited partnership (LPs). The general partners preserve most of the power in partnership through making major decisions of the business. Conversely, the general partners assume full responsibility for the liabilities of the business. The limited partners’ faces limited liability, thus liable up to their contribution in the business and business assets when the business goes bankrupt or is sued. Nonetheless, the limited partner has limited powers on normal business matters or big decisions (Twomey, Jennings & Greene, 2015).
Limited Liability Company (LLCs) is a business structure that integrates features of corporation and partnership structures. One or more individuals, corporations or other LLCs can form LLCs. The members of LLCs are not personally liable to the business obligations and the realized profit or losses of the business are declared on members’ personal income tax return (Twomey, Jennings & Greene, 2015).
Professionals in accounting and law fields mostly use limited liability partnership (LLPs). The LLPs partners are not liable to careless actions of other partners and are not personally responsible for business obligations. Moreover, the LLPs do not pay taxes hence the partners file their personal income taxes return (Twomey, Jennings & Greene, 2015).
Limited Liability Company is the best structure for Devon business. The LLCs can be formed by Devon alone and would not be personally liable to the obligations of the business or when it is sued. Moreover, Devon business will not be liable to pay taxes, but the realized profits or losses of the business would be reported on Devon personal income tax return (Twomey, Jennings & Greene, 2015).
Types of Business Organization and Devon’s options related to the stop payment on the customers check
Devon has options to pursue in relation to the stop payment on the customer check. Firstly, Devon should contact the customer and ask why he put a stop payment on the check. It might be the customer did not have sufficient money to pay the check, thus to avoid a bad check he stopped the payment. If the customer responds that, he did not have enough money this will create a chance for Devon and the customer to agree on modes and period of payment. Furthermore, the customer might have stopped payment on the check because he was dissatisfied with the services rendered by Devon; hence contacting the customer will assist in resolving the matter. The California civil code states that a person who has sued someone who has stopped payment on a check should be awarded damages and three times the face value of the check with a minimum of $100 fine and a maximum of $ 1500. However, before suing the customer, Devon should send a notice by licensed mail to the customer indicating her intention to file charges against the customer due to the stop payment on the check. Devon should offer a copy of signed and written demand in court and licensed mail receipt indicating delivery of the notice to the customer. Furthermore, Devon should demonstrate that the customer did not stop the payment because he was not satisfied with her services. After the failure of the customer to pay after thirty days, Devon should sue the customer (The Superior Court of California, 2016).
Types of Business Organization and Devon’s options related to the undelivered and damaged goods
The Uniform Commercial Code (UCC) outlines remedies for Devon after the Wise sales breached the contract. Devon’s first option is to cancel the contract. When Devon notifies Wise sales that she has terminated the contract, she is entitled to recover the $840 she had paid for the goods. She is also obliged to return the one trimmer and damaged blower. Alternatively, Devon can contact another supplier and purchase one trimmer and one blower to replace the undelivered and damaged goods. Therefore, Devon’s damages will be calculated using the cost incurred to cover plus supplementary and momentous damages. Supplementary damages comprise expenses incurred on inspection, delivery, and storage of goods. Momentous damages comprise of expenses resulting from the breach, such as loss of profits. In addition, the Sales of Goods Act states that consumers’ goods should be replaced and repaired if they do not adequately match to the terms of the mutually agreed contract (Twomey, Jennings & Greene, 2015).
Types of Business Organization and Devon course of action to the missing funds
Devon should respond swiftly by reporting the matter to the bank on Friday night by sending an email that explains the fraudulent activities that have happened to her account. On Saturday morning, she should go to the bank and confirm receipt of her email. If they did not receive the email, Devon should report the matter so that the bank can commence its investigation on the issue. If Devon reports the matter to the bank within two days, she would be liable to $50 in losses for the money withdrawn from her account. Federal Reserve has provided Reg E, which is a set of regulations that oversee all manner of electronic transactions. The Regulation E limits the consumer liability for illegal electronic fund transfers to $ 50 if the consumer reports the matter within two days to their banks. Nonetheless, the consumer liability rises to $500 when they report the matter after three days and the liability is unlimited after the lapse of sixty days (Federal Deposit Insurance Corporation, 2016).
Laws that govern business and consumer banking transactions
Several laws have outlined the rights and liabilities of consumers when conducting their banking transaction. The Regulation E has established rights, liabilities, and responsibilities of consumers in electronic fund transfer methods. According to the Regulation E, Devon will be liable to $50 in losses when she reports the fraudulent withdrawals within two days and the liability is unlimited when she reports the matter after sixty days. The Electronic Fund Transfer Act (EFTA) also establishes consumer rights and responsibilities in relation to electronic fund transfer transactions. The Act requires consumers to report any erroneous statements immediately or within sixty days. The Act argues that Devon would incur a liability loss of $50 when she reports the matter within two days, liability loss of $500 when she reports the matter the third day and the liability would be unlimited when she reports the matter after sixty days (Board of Governors of the Federal ReserveSystem, 2013).
Types of Business Organization and Ethical concerns
When Devon’s customer stopped payment on the check, she was faced with the challenge of choosing the best alternative that would resolve the issue without affecting her relationship with the customer. Devon might choose to file charges against her client, the option will enable her to get her money plus damages, but the option might ruin her relationship with the customer and taint the reputation of her business. Moreover, Devon might consider the option of contacting the customer and find out the reason for stopping payment on the check. The option would not affect her relationship with the customer, but the customer could say their money was insufficient to pay the check, thus leading to delayed payment (Twomey, Jennings & Greene, 2015).
The breach of contract by Wise sales presents Devon with the option of cancelling the contract or to recover by purchasing goods from another supplier then Wise sales will be liable for the covering cost and other damages. Nonetheless, the option will spoil their relationship and hinder them from participating in future contracts (Twomey, Jennings & Greene, 2015).
Types of Business Organization and Suggestions for Devon to help prevent future occurrences of these types of legal and ethical problems
Devon should adopt other online payment methods that secure her credit card information and prevent people from using her credit card details to use her money. Financial institutions, such as the Bank of America will allow Devon to create a distinctive and temporary card number for every online purchase. The temporary number will be different from Devon’s regular number, expires after a certain period, and is valid for the single online vendor (Twomey, Jennings & Greene, 2015).
Devon should consider reputable online stores like Amazon when purchasing goods online. Amazon is suggested to offer a variety of products and has the option of using Pay Pal that is a safer method of payment. Moreover, Devon should consider courier services by FedEx express that is ranked among the best courier companies in the world (Twomey, Jennings & Greene, 2015).
Finally, Devon should consider other modes of payments, such as paying by cash that eliminates the problem of customers stopping payments of the checks. Moreover, this mode of payment will protect Devon’s money and personal data from safety violations (Twomey, Jennings & Greene, 2015).
Types of Business Organization References
Board of Governors of the Federal ReserveSystem. (2013). Regulations. Retrieved October 18, 2016, from FRB Website: http://www.federalreserve.gov/bankinforeg/regecg.htm
Federal Deposit Insurance Corporation. (2016). FDIC Law, Regulations, Related Acts. Retrieved October 17, 2016, from FDCI Website: https://www.fdic.gov/regulations/laws/rules/6000-1350.html
The Superior Court of California. (2016). How to sue for a “stop payment” check . Retrieved October 18, 2016, from Sanmateo court Website: http://www.sanmateocourt.org/court_divisions/small_claims/stop_payment_check.php
Twomey, D., Jennings, M., & Greene, S. (2015). Anderson’s business law and the legal environment: Comprehensive volume (23rd Ed). Canada: Cengage learning
