03/24/2010 19:55:42 true false false 6 07 false 1.1 false false false default_0.swf 12 Slide1 Welcome to Unit 8! 1 Welcome to Unit 8! 720 540 false false 14 slide1.swf Slide2 Business Organizations 1 Business Organizations One of the questions faced by an entrepreneur who wishes to start a business is what form of business organization should be chosen for the business endeavor. In making this determination, a number of factors need to be considered. Four important factors are (1) ease of creation, (2) the liability of the owners, (3) tax considerations, and (4) the need for capital. Chapters 24, 25 720 540 false false 14 slide2.swf Slide3 Discussion 1 Discussion Limited Liability Companies. John, Lesa, and Trevor form a limited liability company. John contributes 60% of the capital, and Lesa and Trevor each contribute 20%. Nothing is decided about how profits will be divided. John assumes that he will be entitled to 60% of the profits, in accordance with his contribution. Lesa and Trevor, however, assume that the profits will be divided equally. A dispute over the profits arises, and ultimately a court has to decide the issue. What law will the court apply? In most states, what will result? How could this dispute have been avoided in the first place? Assess fully. Justify your answer using information from your reading and be sure to:1. Assess the laws that govern the limited liability companies (Uniform Limited Liability Company Act ULLCA). Pg 5122. Evaluate how these laws frame our scenario and how a court would rule. 3. Conclude how John, Lesa, and Trevor could have avoided the dispute by creating an operating agreement and integrating operating procedures into a written agreement. 720 540 false false 14 slide3.swf Slide4 Assignment 1 Assignment In this Unit, you will fill out the documents necessary to create your own corporation (Articles of Incorporation). A Web resource to locate your secretary of state online and an example is provided below. To Complete the Assignment: 1. Write up a brief description of your fictional business (200-500 words). Describe how you filled out the form and any decisions you needed to make during the process. 2. Fill out the Articles of Incorporation based on the description you provided. 720 540 false false 14 slide4.swf Slide5 Case Analysis 1 Case Analysis Daniel and Sondra Estelle hired Allen’s firm to renovate a home they owned in Ladoga, Indiana. To finance the cost, they obtained a line of credit from Banc One, Indiana, which required periodic inspections to disburse funds. Allen was on the job every day and supervised all of the work. He designed all of the structural changes, including a floor system for the bedroom over the living room, the floor system of the living room, and the stairway to the second floor. He did all of the electrical, plumbing, and carpentry work and installed all of the windows. He did most of the drywall taping and finishing and most of the painting. The Estelles’ found much of this work to be unacceptable, and the bank’s inspector agreed that is was of poor quality. When Allen failed to act on the Estelle’s complaints, they filed a suit in an Indiana State court against Allen Construction and Allen personally, alleging in part that his individual work on the project was negligent. Can both Allen and his corporation be held liable for this tort? Explain. [Greg Allen Construction C. v. Estelle, 798 N.E.2d 171 (Ind. 2003)] In responding to the question be sure to:  Analyze whether or not a director/officer can be held liable for the torts of the Greg Allen Construction Corporation.  Discuss whether or not the facts would constitute the type of act protected by the corporate entity. Piercing veil p 530 720 540 false false 14 slide5.swf Slide6 The End! 1 The End! 720 540 false false 14 slide6.swf