Thursday, December 12, 2019

Advantage and Disadvantage of Different Kind of Corporation

Questions: 1. Advise three friends what they should take into consideration when making up their minds if they should set up their business as a general partnership (unincorporated) or as a limited liability company (incorporated)? 2. A business associate, who has taken on a new role as Operations Manager of a small business, has asked you to help her to explain the difference between an employee and an independent contractor to her Managing Director? Answers: Introduction: The paper attempts to explore the advantage and disadvantage of different kind of corporation. In this paper we discuss two specific kind of corporation or association like unincorporated partnership firm and incorporated Limited Liability Company. In regards to the perspective of England both are almost same but the major dissimilarity present in the liability part. In LLC is has the separate legal entity and in case of partnership, the partners are liable for the actions of each other. On the second part of the paper, it defines the difference between independent contractor and employees. According to work they look very similar but in accordance to the liability they are different. Employees are always duty bound to employer and the employer is also liable for the workers act. In case of independent contractor the employer has no liability. The last part discuss about the matter of dualism and monism theory on the perspective of European Union laws. The application of the theories solely depend on the wish of the members states. 1. Fact: There are three friends who wanted to transfer their business into a partnership firm (unincorporated) or to an incorporated limited liability firm. They have to take certain steps before proceed to the matter. The advices are follows: Unincorporated Partnership Firm: An unincorporated forum means and includes that the association has no distinct legal identity from its members. The whole dangers and legal responsibility concerned in administering theinstitution or businessis governed by the persons who own and administer it. There is characteristically a partnership contract which administers its transactions. But if the agreement is silent the Partnership Act will be applicable on that context. To be prcised, there are no such formalities regarding the registration of the partnership firm (Dine, Koutsias and Blecher, 2007). A general partnership has certain relationships and features within it. The first one is relation among the all partners and next one is relationship with the third parties. The former one can usually be superseded by contract among the partners, while the second one is usually confirmed by individual transaction with the party and the firm as a whole (Davis-Blake and Uzzi, 1993). The belongings of the business are possessed by the partners on the behalf of the partnership firm and they all are individually legally responsible. Along with that they are together and severally liable for trade debts, levy taxes ortortuousaccountability. In accordance to that the profits, that are also shared among the partners. On the other hand, a partnership contract will approximately habitually and specifically offer for the method in which earnings and damages are to be collective (Cahn and Donald, 2010).The partnership will finish by the passing away or insolvency or the removal of any partner (Gerven, 2011). In the context of the country ofEngland and Wales, a concept of partnership does not have distinct legal individuality. Even though, the British WalesReport of Law Commissionplanned to make changes in the rule to form separate individuality for all universal partnerships. British administration determined not to put into practice of the application connecting to common partnership firms. TheLimited Liability Partnerships Act 2000bestowed distinct personality concept n the matter of general partnership concept (Hannigan, 2012). By this discussion we can conclude the matters which are to be kept in mind by the above mentioned three friends. Firstly if they want to create an unincorporated partnership firm, it must be kept in mind the agreement must be made according to the desire of them. The agreement is the only document which will determine the liability. Secondly, the unincorporated associations are generally have no separate legal identity other than the members. So the friends are become partners in the firm and joint and severally liable for the activity of them and activity of each other. Thirdly, the firm will automatically dissolve after the death, insolvency or other discrepancy of the partners. Fourthly, it is a unique and unusual thing the unincorporated partnership does not require any kind of registration. All the loss and profits equally divided among the three partners according to their shares in the firm. Incorporated Limited Liability Company: Alimited liability companyis thestructure or a kind ofprivate limited company. It is a kind of businessarrangement that united thecross taxationof apartnershipfirm orsingle proprietorshipwith therestricted accountabilityof abusiness (Hannigan, 2012). A Limited accountability corporation considered to be a mixture trade unit having definite individuality of together with acompanyand partnershipfirm orsingle proprietorship. A limited liability company even though a company unit, it is basically a type ofunincorporated associationand is not a company (Milman, 1999). In United Kingdom, it is considered to the form ofthe limited liability partnership. This provision is started in near about 2000 and the format is very similar to the United States. It is alike to that US LLC in case of tax neutralisation that is the members are levied at the associate stage, but cannot have the power to pay tax itself. It is identified as a body corporate in other matters except VAT (Morera Balcells, 2014). So in this connection if the three friends want to open up a limited liability company the three friends need to understand certain issues: Firstly, the limited liability company is a body corporate and has a separate legal entity. Secondly it must be registered according to the law. The name and MOA must be according to the law. The company can sue and be sued by its corporate name. The members are liable personally if the exceeds the authority. 2. Difference between employee and independent contractor: The dissimilarity among the independent contractor and an employee is tremendously significant for the reason that the dissimilarity determines legal responsibility to recompense and hold back income tax, communal security and Medicare levy etc. The expression independent contractor is not defined anywhere properly. The universal rule is that a human being is independent contractors if his manager has the privilege to manage the consequences of the service but not the technique of completing it (Nannicini, 2006). A self-governing contractor is a person who has trade for his own. Some extra conditions are there which are utilized to explain autonomous contractors which contain advisor, freelancers, and company and trade proprietors. In addition, an autonomous contractor can be a sole proprietor, a restricted liability business, a Corporation, or a business. An employee is a person who carries out obligation uttered or prescribed by any other person who is generally denotes as the company or principal. The worker regularly experienced education for employment and regarding the accomplishment procedure of job, and frequently works for merely one manager. In a relationship of employer-employee, the manager hold on to the privilege to terminate the worker and the manager offer the worker with apparatus and a position to employment. But in the situation of independent contractors, the question in relation to the relationship of employer-employee is not identified and not established (Studer, 2005). Along with the difference lie in certain other questions like the span of time desirable to carry out the employment or whether imbursement is stand on duration of work or piece of delivery of work or, whether the employment is division of the usual trade of the company or, whether the party consider they are manager and worker etc. These determining factors are important to focus on the matters because the matter of liability in tax and other sections depends on the situation. The managerial control over the person also depends on the similar situation (Studer, 2005). There are three major categories under which the difference can be ascertained. First one is behavioural management, monetary control, and kind of relationship. The first issue is behavioural management which includes the fact that demonstrate whether the trade have privileges to command or manage the process of accomplishment of the work or not or they can have the power to provide training on that aspect (Nannicini, 2006). The second issue is fiscal control. Fiscal control includes particulars that demonstrate whether the company has a privilege or position to express or manage the economic and commerce features of the job of the employee. These comprise written agreements exhibiting the relationship of the parties planned to generate, whether the employee is give with workers reimbursement or the base of the association. In summary it can be concluded that: An employee generally works for only one employee but independent conductor is not bound to do that because they have their own business to execute. The working hours are generally set for the employees but the independent contractors are not time bound. The company provides the benefits to the employees which can only be avail by the employees specifically not by the independent contractor. The employer provides director not only about work but about the process of work to his employee but the process of work is always determining the independent contractor. The cost of work is not incurred by the employees but in case of independent contractor, he himself has to bear all the cost. After lay off or other industrial matters the employees are authorised to take the compensation but the independent contractor is not eligible on that occasion. The employer has the right to terminate the job of employee but not the independent contractor. If the employee did any kind of negligence the employer is vicariously liable for the act but not for the act of independent. The labour laws will applicable in the situation of employees but not in case of independent contractors. The work place safety laws are applicable to employees but generally not to the independent contractor. The employees have the right to engage in the trade union but the independent contract has no such right against the company. So in this way the operation manner can demonstrate the matter of difference in relation to an employee and independent contractor. This all are basic differences. Though both of them are looking similar according to the view of work process, control and management they are very much dissimilar with each other. Conclusion: The first part is taking about the distinction among the different limited liability corporations. It provides the applicability of legal rule prior to the establishment of this time of associations. The second phase talks about the distinction of independent contractor and employee. Though in simple meaning they look similar but n case of control and liability from the side of the employer, they are very much different from each other. 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