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Business Law | The General Corporation Law

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Added on  2019-09-30

Business Law | The General Corporation Law

   Added on 2019-09-30

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To: SupervisorFrom: EmployeeRe:Career Institute of America, Inc. (CIA)Date: December 6, 2016Summary of Applicable Facts:The Career Institute of America Inc was formed as a non-profit corporation under theDelaware of the ‘Non-profit association Act.' It provides online and classroom training tostudents. The revenues are generated from the fees paid by the students. The companyhas also received a one-time grant from the U.S. Department of Labor that is madeavailable to non-profit organizations. The liability is unlimited. There are several otherthings that require the status to be reconsidered. The training courses at CIA are currently conducted by independent contractors who arenot under regular employment in the organization. A clear agreement has been signedbut. It does not stand up to the legal scrutiny, and this requires a solution to this problem.CIA now needs to communicate to its instructors that their status is that of the‘independent contractors’ and not that of ‘employees.' 1
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Issues:The key issues for the business currently are:What is the most appropriate form of business organization for CIA?How can the contracts reflect the status of instructors as independent contractorsand not that of an employee of the company?Law:Business Law The current laws relating to ‘The General Corporation Law’ is designed to provide theease of carrying out of business, change the status of the existing business and also allowthe change in the business structure. Business owners who want to incorporate theirbusinesses in Delaware may do so by registering as Corporations, Limited LiabilityCompanies, Non-profit associations or as Professional service corporations. Other thanthe above options, there is sole proprietorship or partnership. If all business owners wantto protect their personal assets from being used to pay business debts, ‘Limited liability’is a key to protecting the interests of all business owners. If in a circumstance where thebusiness lacks funds to pay off company debt, or creditors, a lawsuit, the owners cannotbe held liable for the same.2
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Independent Contractor Law ‘What differentiates the status of an employee from that of an independent contractor’ isin relation to the extent to which the employer has control over the means and methodand the process of completing the work. An independent contractor determines how thework has to be done whereas; an employee is guided by an employer in regard toperforming the job. Employers are required to pay payroll taxes, provide unemploymentinsurance and workers compensation benefits for the employees. Independent contractorsare governed by their own working hours, paying their own income tax, employmenttaxes and providing for their benefits. [ CITATION NIF15 \l 1033 ]Analysis:Business OrganizationCIA should utilize a different business format. The company earns its revenues on the feebasis which is not meeting the criteria of non-profit as the non-profit cannot make itsearnings like this. CIA may, therefore, choose to organize its business as a LimitedLiability Company or a Corporation under the Delaware corporation law [ CITATIONFox06 \l 1033 ]. This is because of the reason that the CEO will benefit from its LimitedLiability protection. He will not have to pay the debts from his personal assets, and onlythe company's assets can be used to pay out the debts and liabilities. The company canregister by filing its Articles of Incorporation and have their owner’s draft bylaws (in thecase of a corporation) and Articles of Organization along with an operating agreement (in3
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