Tennessee State CLEs Describe advantages and disadvantages of the basic forms of business ownership...
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Transcript of Tennessee State CLEs Describe advantages and disadvantages of the basic forms of business ownership...
Businesses, Workers,and the Law
Tennessee State CLEsDescribe advantages and disadvantages of the basic forms of business ownership (sole proprietorship, partnership, and corporation) and identify variations of basic forms of business ownership (franchise, limited partnership, cooperative, limited liability company, and S corporation).Determine which ownership structure is employed by the selected business and hypothesize why it was selected.Review copies of available partnership agreements, articles of incorporation or franchise contracts, noting characteristics important for successful operation of a given business. (TN Reading 1, 4; TN Writing 4, 9)
How do you thinklaws affect business?
Bell Ringer (YOU DO)
Identify the different kinds of laws that affect businesses.
Describe the different kinds of laws that protect workers on the job.
Explain how tax laws affect business profits. Explain the differences between copyrights,
patents, and trademarks. Describe the different laws that protect workers
on the job. Explain the importance of the National Labor
Relations Act.
Objectives
Government Regulation of Business
Regulations Areas of Law that AffectBusiness Operations
Rules that government agencies issue to implement laws
A lot of time and money spent ensuring compliance, avoiding unwanted liability
1. Corporate law2. Tax law3. Intellectual property
law4. Consumer law5. Commercial law6. Licensing and zoning
law.
Corporate Law
Sole Proprietorship
PartnershipCorporation
YOU DO Word Studies (15 minutes)
Simplest kind of business, easiest to start
Most common form of business organization
Owned and managed by one person
Owner entitled to all assets (property owned by business)
If proprietor has business debts, creditors (those to whom money is owed) have first claims against the assets
Proprietorship
Owner is boss Owner receives all profits Owner personally knows employees and
customers Owner can act quickly in decision making Owner is free from red tape Owner usually pays less income tax than a
corporation
Advantages of Proprietorships
Owner may lack necessary skills and abilities
Owner may lack funds Owner bears all losses Illness or death may close the business
Disadvantages of Proprietorships
Primarily concerned with providing personal services
One that sells merchandise or services on a small scale
Businesses Suited to Being Proprietorships
Owned by two or more people
A clearly written and understood partnership agreement can prevent problems later
Net worth = assets – liabilities
Partnership
Skills and abilities pooled
Sources of capital increased
Credit position improved
Contribution of goodwill
Increased concern in business management
Less tax burden than corporations
Reduction in competition
Retirement from management
Operating economies
Advantages of Partnerships
Unlimited financial liability
Disagreement among partners
Each partner bound by contracts of others
Uncertain life Limited sources of
capital Unsatisfactory
division of profits Difficulty in
withdrawing from partnership
Disadvantages of Partnerships
Restricts the liability of a partner to the amount of the partner’s investment
Not all partners have unlimited financial liability for the partnership debts
Limited Partnerships
Furnish more than one kind of product or service
Selling goods and services to customers Professional services
Businesses Suited to Being Partnerships
Formed under state or federal statures that is authorized to act as a legal person
Exists apart from its owners
Can be taxed and sued like an individual
Owners have limited liability—cannot lose personal resources if corporation fails
Corporations
Offer stockholders limited liability and a share of the profits
Stockholders have no management responsibilities
Can raise money by selling stock Have an easier time getting credit
Advantages of Corporations
Must comply with many more federal and state laws
May pay more taxes
Disadvantages of Corporations
Tax LawTaxes are monies paid
by corporations and individuals and are used to fund government programs and services, such as highways and schools.
Levied against a business’s profits
Most important tax
Income Tax
Levied against the property, buildings, or land owned by a business
Based on an assessed valuation of the building or land
Amount that a piece of property is worth, according to a tax assessor.
Property Tax
Government requires businesses to withhold income taxes from employees’ earnings and send them to the federal government
Managers make important decisions because of taxes, such as relocating
Withholding Federal Taxes
IntellectualProperty Laws
Intellectual property laws protect the inventions and new ideas of business.
The document the federal government issues to inventors and companies that gives them the exclusive right to make, use, and sell their inventions for 17 years
When time is up, others can begin selling
Inventor of each type of new product must apply for another patent
Patents
A word, name, symbol, or slogan a business uses to identify its own goods and set them apart from others.
Once owned, no other company can use it.
Good for 10 years, can renew every additional 10 years
Trademarks
The protection provided to creative work
Literary works, musical compositions, plays, dances, paintings, movies, maps, and computer programs
Owner the only one with legal right to reproduce the work, sell it, or allow others to use it
Lasts the holder’s life plus 70 years
After that, work becomes part of public domain
Copyrights
In groups of three, design a trademark for either a real or imagined business.
THEY DO Team Activity(10 minutes)
What do you think daily like would be like if government did not regulate business in any way?
THEY DO Discussion Starter
Consumer LawTo protect consumers from unfair business practices, the federal and state governments have established consumer protection laws.
Business treated you unfairly?
Write a letter of complaint to the FTC.
Will take action against a company if it receives enough consumer complaints to establish a “pattern of wrongdoing”
Used Car Rule requires dealers to tell customers important information about a used car
Telemarketing Sales Rule helps protect from being bombarded with unwanted telemarketing calls by placing limitations on companies
The Federal Trade Commission
Food and Drug Administration (FDA) protects against problems wit mislabeled and impure foods, drugs, cosmetics, and medical devices.
Approves all new drugs before sold
Fair Packaging and Labeling Act requires manufacturers of foods, drugs, cosmetics, and medical devices to clearly label products with the name of the manufacturer, the contents, and the amount the package contains.
Labels on packaged food must provide complete nutritional information.
Other Rules that Protect Consumers
Commercial Law(The basic commercial law document is called theUniform Commercial Code)
Contracts Business Sales Contracts
An agreement between two parties to carry out a transaction
Can be enforced in a court of law
Must follow specific rules to stand up in court
Often difficult to break Must state parties agreed
and give the quantity of goods involved
Often short, simple documents that meet the requirements of the Uniform Commercial Code
Managers involved at every stage of assembling and reviewing contract
Ensure the right information gets to the people who make the contracts
Sorry Charlie: Starkist Must Compensate Consumers
Summarize with 3-2-1 Review◦ 3 Things You Learned◦ 2 Things You Found Interesting◦ 1 Question You Still Have
Reading With a Pen
If there is a disagreement between two businesses about what certain provisions in a contract really mean, how should they resolve their dispute?
YOU DO Drawing Conclusions
Regulates who can operate a business and where owners can set up shop
A way to limit and control people who plan to enter certain types of businesses
Government officials can take away license from business not complying with laws and regulations
May also regulate through building codes, which regulate physical features or structures of buildings
Licensing and Zoning Law
Stan and Linda have a perpetual yard sale business. They buy and sell used items, like clothes, furniture, and tires, under an awning in their front yard.
What government regulations are probably being violated?
YOU DO, THEY DO Critical Thinking
Imagine you want to raise and sell organic fruit.
Using the six areas of law, make a list of question you will need answered to start this business.
YOU DO Application Activity(10 minutes)
What kinds of business activities do you think should and should not be regulated? Explain your answer.
YOU DO, THEY DOEvaluating Information
1. How can the government enforce its regulations against businesses?
2. List three types of business ownership.3. Why should businesses be concerned about
taxes?4. What kind of intellectual property law protects
an invention? A soft drink’s logo? A hit movie?5. True of False: Consumer protection laws apply
to both individuals and businesses.6. Why does a manager need to know exactly
what is contained in a business contract?
YOU DO Fact and Idea Review
Ted Change is the government affairs manager for Emerging Inc., a software firm in California. He just found out that California has passed two new laws. One law raises income taxes from 30 t0 35 percent on company profits. The other law restricts companies from selling software to consumers without including instructional guides in the packages. Ted’s boss asks him to write a memo about the effects the laws may have on the company.
Apply: Prepare a memo answering these questions: If Emerging makes $100,000 in profit, how much more in taxes will it have to pay? What kind of law is the “how-to” guide restriction. (Prepare in Word and Print.)
YOU DO Case Analysis