Business Law

Business Law
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Considerations for general partnerships and limited liability companies

Starting a business is a challenge that is both daunting and rewarding. One of the key considerations that should be made in the early stages of setting up a business concerns how to structure it. This includes the type of legal entity that the company will take. This decision is basically made in the initial stages of setting up new business and plays a significant role in determining whether the enterprise will succeed or fail later on. Partnerships are just one type of legal business entities and can either be general partnerships or limited partnerships.

General partnerships

A general partnership is defined the association of two or more individuals who join together as co-owners of a business for the purpose of generating perfect. General partnerships, like sole proprietorships, do not give owners any protection from liabilities. The owners of companies under this form of business entity have a legal responsibility on a personal level to all the obligations and debts of the enterprise. One thing that sets these types of business entities on a separate part from the rest is that they have multiple owners something that give rise to complicated questions regarding management and control, transferring interests that are associated with the partnership, as well as sharing both profits and losses. However, these issues are usually addressed within the partnership agreement (Ellis & Price, 2003).

Limited partnerships

These types of partnerships similarities with general partnerships with the exception that allow for the existence of two classes of partners: general partners and limited partners. If a partnership is limited, then it should at least have one limited partner and at least one general partner. In a limited partnership type of business, the general partner is liable for all the obligations and debts of the enterprise. On the other hand, the limited partner is not. Generally, limited partners are not to participate in the day-to-day management of the company (Henning, 2012).

Factors to consider

Legal liability

In all forms of businesses, the owners of the company are fully responsible for the own individual intentional or negligent errors or acts. The low has however involved in many cases so that it can offer protection from any form of liability for any acts or obligations that arise from the business associates or even the company it. Although general partnerships do not provide any form of limited liability, there are several other business entities that offer liability protection. The new friends who are intending to set up the business entities should be aware that there are particular formalities that need to be followed in addition to other steps so that limited liability can be maintained whenever possible (Hamilton et al., 2010).

Tax consequences

The friends should be aware of tax implications that come as a result of particular types of business entities such as partnerships. Some types of businesses entities can be subjected to double taxation whether taxes imposed both on the enterprise as well as an individual level entity. Limited partnerships and general partnerships are generally treated as “pass-through” business entities meaning that there is very little or even no taxation at the entity level. However, there are certain requirements that need to be met so that the business can be elevated to be considered as a pass-through entity. Another consideration that needs to be noted by the friends is that there are different franchise tax and income rates whose significance depends on certain circumstances such as the regional location of the business enterprise. Furthermore, there are other implications such as employment and payroll tax obligations traditionally depend on the regional location of the business enterprise. If the friends structure the business properly, they can avoid painful encounters when paying their taxes in the future (Hamilton et al., 2010).

The governing law of state of formation

Although this can vary by region, the doctrine of internal affairs generally provides the internal affairs and governance of the business is dictated by default and governed by the laws of the area with the business is formed. This has a significant effect on critical matters such as the voting rights of shareholders the methodology used to distribute dividends, in addition to the fiduciary obligations of the management. These rules can sometimes be overridden by the regional rules in the governing documents or business. However, the three friends should carefully note that this doctrine has certain implications depending on where the business is registered. So, when choosing to establish their business informal partnership, the three friends should have a keen understanding of how the particular loss of the region, where they intend to register the business, treat the type of partnership that they are planning to adopt. There are certain areas within the European Union, for example, that are known as the corporate havens that have a friendly approach to the management and leadership style of business in terms of legal requirements. These particular regions of been known to attract a lot of new enterprises. A good example is Turkey. Other regions such as the UK region have been known to have professional business expertise when it comes to matters related to business litigation (Henning, 2012).

Exit strategy

Finally, the three friends should have a well thought out exit strategy for their partnership. Their choice on whether to set up a limited partnership or general partnership can have significant implications and limit their choices when it comes to crafting an exit strategy. For example, they should carefully consider whether they intend to grow the business beyond the partnership, operate the business enterprise indefinitely, least the business in the capital markets, or find a buyer for the business at a later point in time. Most new entrepreneurs do not have a clear exit strategy when they set out to form new businesses. Research has shown that most will consider choosing the appropriate type of legal entity are likely to have more opportunities to choose from when deciding to exit the business (Jolly, 2008).


The difference between the independent contractor and employee

an employee is generally defined as a person who is employed under the contract. When attempting to differentiate between an employee and an independent contractor, there are several factors that need to be taken into consideration. However, it is crucial to understand that there is no single indicator that can be used in determining whether a person is an independent contractor or employee. This distinction is usually based on the individual merits of the person of the work arrangements that is in place. When determining the employment status of an individual, courts will normally consider the relationship between the parties. Several indicators exist that can be used to differentiate clearly between an employee and dependent contractor (Fishman, n.d.).

One of them in regards the extent to which the individual has control over how he or she performs the work. Normally, employees work under instructions from the employer. These instructions are followed in a daily and continuous manner that can be considered as a routine. Independent contractors, on the other hand, have higher levels of control regarding how they perform their jobs. When it comes to the hours of work, employees normally work within predefined working hours. It is important to note that casual workers have working hours that may vary depending on the schedule the job. Independent contractors on the other hand work under some form of agreements where the independent contractor decides at what time he or she will work so as to complete a particular task (Jolly, 2008).

Another indicator is the expectations of work. Employees have an ongoing expectation regarding their jobs and how they perform specific tasks. It is important to note at this point that certain employees can be engaged for a particular period or a particular task. Independent contractors, on the other hand, are usually engaged only when performing particular tasks. Employees do not have any form of financial risk concerning the kind of tasks you are performing. Independent contractors have a risk of making losses on each particular task. Independent contractors will be individually held responsible for any type of work that is being performed poorly or any injury that is incurred when performing particular tasks. This is something that as forced independent contractors to consider insurance health schemes.

Another difference between an employee and an independent contractor regards superannuation. The superannuation contributions of employees are paid into a nominated fund by their employers. Independent contractors, on the other hand, pay their own superannuation fees. There are certain circumstances where independent contractors may be entitled to a given superannuation compensation. Aside from that, equipment and tools is another element that differentiates between an employee and an independent contractor. For an employee, equipment and tools are in most cases provided by the employer (Engellandt&Riphahn, 2004). One of the cases, the employer, pays a smaller lowers whenever an employee uses his or her own tools. Independent contractors, on the other hand, use their own equipment and tools. However, there are certain instances where an independent contractor may be provided with tools although this is in most cases well-defined within the performance contract. When it comes to paying taxes, employees will have their taxes deducted from their salaries directly by the employer. This is very different compared to an independent contractor who pays their own tax. When it comes to payment method, employees are paid within a regular period whereas independent contractors submit their invoices after completing the job so that they can be paid (Guest et al., 2010). In addition to these, employees are entitled to receive paid leaves such as personal/carers leave, annual leave, and long service leave. These benefits are not available to independent contractors who do not receive any form of paid leave.

Elements of the European Union

the dualist system

Dualist systems emphasize the difference between international and national law and require that international law is translated international law. Without this particular translation, there is no possibility of international law existing at law. International law has to be translated the international law, or else, it is not a law at all. If a state accepts a treaty but refuses to adopt its national law so that it can conform to the accepted treaty, and refuses to create a national law that helps to incorporate the convention, then the state is considered to violate international law. However, one cannot say that the treaty has now become part of the national law. Judges cannot apply the law, and neither can citizens rely on it. In the national legislation that contradict the treaty remain in force. According to the supporters of the dualist system judges, cannot apply international law unless it has been domesticated at the national level of the state. As such, international law has no way of conferring any form of rights to municipal courts. It is only applicable as far as international rules are recognized by the state and as included within the rules of municipal law.

Just like in the monist systems, international law is supreme. However, there is a self-evidentprinciple within the international law where it states that in a given State cannot invoke its own municipal law primarily because of nonfulfillment of its own international obligations. In cases where the international law cannot directly be applied, its translation into international law must be made, and that international law that is in direct contradiction to the international law must be translated away. This law must either be modified or completely eliminated so that it can conform to the international law standards. From the point of human rights, there is general acceptance of treaties purely for political reasons why by most countries do not translate these treaties into national law.


In one is in systems reality consists of only one ultimate fundamental essence. Supporters of monist’s systems generally accept that international and internal legal systems form a unity. Actions are considered illegal or legal depending on the legal rules and international rules that have been accepted by the state, for example, by the way of the treaty. In monist systems, there is a clear distinction between different types of international law (such as treaties). For example, there is a distinction between customer international law and law pertaining to human rights. As a result of this, some of these states can be considered as partly dualist and partly moist.

In a country that is purely monist, then there is no need for translating international law into national law. International law is basically incorporated within the domestic legal system and eight directly impacts or domestic or national legislation in an automatic manner. If a state ratifies an international treaty, then the same state incorporates the international law within the domestic legal system automatically. Customary international law is now treated as part of the laws of the state domestically. Citizens of the state that has incorporated the international law can directly invoke it. The same applies to judges in courts of law. In addition to this, a judge can declare that and national law to be invalid if it contradicts international law in a purely monist state. In countries such as Germany, treaties have the same basic effect just like legislations. In a country that is practicing a purely monist system international law that contradicts international law is considered narrow and avoid. This does not take any consideration in regards to her the national law predated the international law or whether it is in the Constitution.

When observed from the human rights point of view, monism systems have some clear advantages. For example, if a country has deeecided to accept a treaty regarding human rights such as the international covenant on civil as well aspolitical rights, but has some of its particular laws limiting the freedom of the press, then a citizen of that particular country is prosecuted by the state for violating the national law can invoke the human rights treaty. The individual can invoke the treaty within the national courtroom and request the judge to apply the human rights treaty and make a decision that the national law is invalid. There is no need for the individual to wait for the national law that translates the particular international law.


the dualist perspective is the most predominant in countries such as the United Kingdom. This means that international law can only be considered as part of the British national law only after it has been accepted as a national law. The treaty does not have any effect on the municipal law until legislators passed an Act of Parliament to give the international law in effect. This distinction in other countries tends to be vague. In the many countries outside the Commonwealth, only a part of the legislature actively participates in the ratification process of treaties and international laws in order for the same to become a legislative act, and also so that the treaty can become effective both in the municipal law and international law simultaneously. In a country such as the United states of America, the president has power by and with the consent and advice of the Senate to make any treaties as long as two thirds of the Senators who are present concur. If treaties have been ratified according to the Constitution of the United states of America, then these treaties are domesticated within the municipal law of the USA (Lim, 2014).

The United States of America has a mixed dualist-monist system. There are cases where the international law can directly apply within the US courts and not in other cases. Article 6 of the U.S. Constitution, for example, does not say that treaties form any part of the Supreme Law of the Land. Some treaties have been considered as not “self-executing”. It is required that such treaties are fully implemented by the statute even before their provisions can be affected by the sub-national or national courts (Lim, 2014).


Ellis, C. & Price, S. (2003). UK business investment. London: Bank of England.

Engellandt, A. &Riphahn, R. (2004). Temporary contracts and employee effort. London: Centre for Economic Policy Research.

Fishman, S. (n.d.). Working with independent contractors.

Guest, D., Isaksson, K. & Witte, H. (2010). Employment contracts, psychological contracts, and employee well-being. Oxford: Oxford University Press.

Hamilton, R., Macey, J. & Moll, D. (2010). Cases and materials on corporations, including partnerships and limited liability companies. St. Paul, MN: West/Thomson.

Henning, J. (2012). Partnerships – Limited partnerships and limited liability limited partnerships. ac. 2000 (31).

Jolly, A. (2008). The growing business handbook. London: Kogan Page.

Lim, D. (2014). Can a Dualist Adopt Bennett’s Strategy?. The Philosophical Forum.45 (3). pp. 251-271.

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