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Defines business entity refer to enterprises that are formed by an individual or group of individuals, who engage in business activities with an aim of making profits (Emerson, 2013). There different types of business entities which includes but not limited to the following; sole proprietorship, partnership, and corporations. When starting an enterprise, it’s always significance to decide the form of business entity to develop. This is because an entrepreneur will be able to ascertain the legal requirements, liabilities, revenue tax returns forms to file among other crucial information with regard to the chosen form of ...view middle of the document...
Example of Federal taxes includes income tax, estimated taxes, and employment taxes such as social security and Medicare, income tax withholding, federal unemployment among others. It is worth to note that State taxes vary from one State to another State; therefore, the State taxes requirements depend upon which State the franchise is operated (Cheeseman, 2012).
Business Liability Issues
If a franchise is thoroughly organized and run, the franchisor and franchisee are different legal entities.´ this makes the association between the franchisor and franchise such unconstrained contractor. This moves the liability from the franchisor to the franchisee incase of breach of contracts or torts.
Restaurant or bar: Lou and Jose plan to open a sports bar and restaurant where customers socialize and watch sporting events on large-screen televisions that hang around the bar. They do not have much money, but they do have Miriam, a wealthy investor who does not have time to participate in the business, but wants to provide capital to start the business in return for a percentage of ownership.
In this scenario, the most probable business entity choice is a limited partnership. The Uniform Limited Partnership Act establishes the provisions with regard to the formation of partnership, its operation and dissolution of limited partnerships in the state that the partners have their principal business. In these form of business entity, some owners are considered as general partners who are involved in handling day to day...