Business Entity

Business Entity Paper

Choosing what type of business entity a business wants to become is a lengthy decision. Owners need to decide what entity will give them the best form of business structure, highest tax benefits and what governments will the business to run as. The following paper will demonstrate what business entity each business will become, the formation of the business, who will own the business, liability, what the taxation will be, dissolution, control and the formality of the business.

Restaurant/bar

Lou and Jose want to open a sports bar and restaurant in Portland, Oregon. They customers to be able to eat, drink, socialize and watch sporting events on a large screen TV. Lou and Jose do not have much money. But, they do know a wealthy investor, Miriam, who would like to invest into a business. Miriam does not have time to run the business on a day to day basis. She does, however, have enough capital investment to start up the business and she also want to own the business.

The business entity Miriam should become a sole proprietorship and form a limited liability company (LLC). Sole proprietorship can benefit of the limited liability shield of LLC. The bar/restaurant cannot be a limited, general partnership and corporation because there is not more than one investor.

Miriam will have to file articles of organization with the secretary of State of Oregon. Within the articles of organization Miriam must state LLC's name, how long she plans on being in business, other information Miriam feels is important in forming the LLC.

Miriam will be the owner of the business. Lou and Jose will run the business under the manager-managed LLC. Miriam will provide an operating agreement that will regulate the affairs of the business and govern managers. She should show her ownership by creating a certificate of interest. That way she will receive 100% of all profits.

Miriam will be liable for any loss or injury caused to anyone by result of wrongful act by herself, manager, or employee of the bar/restaurant.

Taxation can be occur by partnership or as the corporation itself. If Miriam elects to taxed by partnership, she will only be taxed profit/loss from the bar/restaurant. She will not be double taxed.

The dissolution of the bar/restaurant can happen by either the time stated in the articles of organization or Miriam herself. Miriam can at will end the LLC unless she stated anything different in operating agreement. If Miriam decides that the LLC can continue after the stated time in articles of organization, she is able to.

In forming the LLC, becomes a formal way of forming a business entity. Miriam will be in control of business overall. But Lou and Jose will run the business as managers.

Extermination