Introduction to Business Law

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Types of Business Organizations

Traditionally, there are 3 main forms of business that manifest into either a sole proprietorship, a partnership, or a corporation. Other forms exist under the Limited Liability category such as, a limited liability partnerships (LLP), a limited liability company (LLC), and a professional corporation (PC). Each business form maintains their own advantages and disadvantages.

A sole proprietorship is the most simple form of business in which one person owns the business, is entitled to all profits made, and is responsible for all of the business's debts and obligations. The main advantages of being the sole owner of a business are the undivided profits, the freedom to make any and all business decisions, and the ability to enjoy tax-exempt retirement accounts. Two main disadvantages include the responsibility of all debts, losses, and obligations associated with owning a business, and the potential difficulty of attaining capital without the assistance of fellow partners.

Partnerships may be formed when two or more individuals agree to partake in a business venture. Some of the advantages of working within a partnership include the increased potential for capital, networking opportunities, and better decision-making. One of the main advantages, that may also be considered a disadvantage, is the sharing of liability. All partners are responsible for the actions of each other, even if the actions of a partner is not agreed upon or participated in. Another disadvantage of a partnership is the lack of freedom to make general business decisions without the consent of other partners.

The third main form of business is the corporation. A corporation is an entire company or group of people that functions as a singular legal entity that is created and recognized by state law. Corporations are seen as a legal "person", thus they are entitled to the same constitutional rights as citizens such as the rights to due process and the rights protecting from unlawful searches and seizures. Advantages of forming a corporation include limited liability, potential for high capital, and an unlimited corporate lifespan. Disadvantages include high taxation and excessive tax filing protocols.

Lastly, limited liability organizations are described as hybrid forms of organizations that combine aspects of corporations and partnerships/ sole proprietorships. Generally speaking, this form of organization allows for the combination of tax advantages of a partnership with the limited liability of limited partners or corporate shareholders.

Responsibilities of Corporate Participants

In the corporate realm there are a handful of positions, or participants, that exist to allow the corporation to function. The 3 main participants include the shareholders, the directors, and the officers.

Firstly, the shareholders are considered the owners of the corporation. Their ownership is established with the purchase of corporate shares or stock.  Shareholders enjoy limited liability and are not personally responsible for the debts and obligations of the corporation beyond the amount of their investments.

Second are the directors who are elected by shareholders with the purpose of directing corporate affairs. Their responsibilities include the participation in board meetings, inspection of corporate books and records,  declaring and paying dividends, appointing and removing officers, and making significant policy decisions.

Lastly, corporate officer are simply persons hired by corporate directors to assist in the management of the day-to-day operations of the corporation. Also, officers are employees of the corporation and are subject to employment contracts, as well as agents of the corporation.

Bankruptcy

The state in which a debtor, such as an individual or an organization, whose property is subject to voluntary or involuntary administration under the bankruptcy laws for the benefit of the debtor's creditors is known as being bankrupt. Thankfully, modern law has allowed for a more gentle procedure for dealing with debtors who cannot meet their payments, which is called bankruptcy law. This law has two main points being: To provide relief and protection to debtors, and to provide a fair means of distributing debtors’ assets among the creditors. The law attempts to balance the rights of debtors and creditors. 

Environmental Law

It's important that the condition of our planet be taken into consideration, so that we can avoid pollution, destruction of natural habitats, etc. Legislation and government agencies have been created to manage these concerns. The National Environmental Policy Act of 1969 imposes environmental responsibilities on all federal agencies and requires the preparation of an environmental impact statement (EIS) for every major federal action. An EIS must analyze the action’s impact on the environment.  The federal Environmental Protection Agency (EPA) was created in 1970 to coordinate federal environmental programs. The EPA administers most federal environmental policies and statutes. Three important areas of environmental law that are regulated fall under air pollution, water pollution, and toxic chemicals and hazardous waste.

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