03/24/2010 19:55:42truefalsefalse607false1.1falsefalsefalsedefault_0.swf12Slide1Welcome to Unit 8! 1Welcome to Unit 8! 720540falsefalse14slide1.swfSlide2Business Organizations 1Business 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 720540falsefalse14slide2.swfSlide3Discussion 1Discussion 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. 720540falsefalse14slide3.swfSlide4Assignment 1Assignment 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. 720540falsefalse14slide4.swfSlide5Case Analysis 1Case 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
Discuss whether or not the facts would constitute the type of act protected by the corporate entity.
Piercing veil p 530 720540falsefalse14slide5.swfSlide6The End! 1The End! 720540falsefalse14slide6.swf