Business Law 3: University Discussions on LLC, LLP, Corporate Veil

This assignment delves into key aspects of business law, focusing on the formation and implications of different business structures. The first part involves analyzing two scenarios, advising on the appropriate business forms (sole proprietorship, partnership, LLC, etc.) for specific business ventures and justifying the recommendations based on legal principles and strategic advantages. The discussion highlights how to protect personal assets, manage liabilities, and address tax implications. The second part of the assignment centers on the concept of piercing the corporate veil, explaining its meaning, the conditions under which it can occur, and the measures businesses can take to avoid it. It references relevant case law and emphasizes the importance of maintaining the separation between corporate and personal assets. The assignment provides a comprehensive overview of legal structures and their implications for business owners.

University
Business Law
Discussions
Student Credentials
3/25/2020

Business Law 1
Discussion 1
a) In Susan’s case, it will be beneficial for her to form an LLC or become a part of the
same by her own. This can assist her with taking better decisions regarding the kind of
business she wishes to conduct. In this manner the personal assets of Susan will
remain untouched and she will be liable for just what she invested in the company and
not above that. This will also prevent her from being double taxed as her own assets
will not be considered as a part of the company while filing company’s taxes. Susan
without much issue can focus on expanding her company and work on betterment of
the same.
In situations like the one where the company goes into liquidation, then Susan will not
be personally liable to pay off the losses and her personal assets cannot be utilized for
the purpose. Another situation is when Susan is in a dilemma regarding an issue; in
this case decision can be made upon mutual decision or after all the options are
analysed amongst the members.
b) In the second scenario, John and Phil both can start their own Limited Liability
Partnership business as in their case it will be an apt option. When the issues of taxes
arise, every partner is supposed to pay their own taxes on their earnings from the
business and none of them will be taxed twice. Since, Phil is concerned about the
profits, the partnership agreement will have a specific profit sharing ratio that will be
decided amongst them mutually, and therefore, the profit from the business will be
divided respectively.
In situations like the one where they need more investment or if their venture
expands, they can without any trouble add in another partner in their partnership
agreement and mutually decide on their new terms as well as profit sharing ratios.

Business Law 2
Scenarios or dilemmas related to the profit will be resolved as well, as the partners
will be liable for just the amount they invested in the business and their personal
assets will not become a part of the Partnership’s property. Creditors cannot sue them
personally for partnership’s deed, until and unless the partners have committed some
sort of wrongdoing or fraud with the third party and an intervention becomes a
necessity.
Discussion 2:
Piercing the corporate veil is basically an action that is taken against a company that
renders to the shareholders, owners and members to be prone to personal liability for the
actions of the company. In such situations the whole structure or the governance structure
related to the corporation is disregarded. All the members or owners or shareholders become
personally liable for the losses incurred by the company along with its goodwill. It is a legal
action taken by third parties when there is either failure of maintaining the identity of the
company separate from the one of its members or shareholders, or in scenarios where there is
any kind of wrong doing towards the third parties is committed or anything as such. This
‘veil’ provides protection to the owners as well as to the company (Jimerson & Snell, 2016).
Few of the cases in which such issues have arose are, Broward Marine, Inc. v. S/V Zeus, No.
05-23105CIVOSULLIVAN, 2010 WL 427496 (S.D. Fla. Feb. 1, 2010) and Ocala Breeders’
Sales Co. v. Hialeah, Inc., 735 So. 2d 542 (Fla. 3d DCA 1999) (FindLaw, 2020). In order to
protect the company from this action there needs to be a certain measures followed such as;
the annual filings of the company needs to be done, Internal formalities need to be taken care
of, there needs to be written record of any of the decisions that have been taken in corporate
position, particular corporate notices need to be provided to the world, ensuring that the
capitalization of the company is efficiently done, as well as distinction between the corporate

Business Law 3
assets and personal assets has to be maintained as well, corporate profits being distributed
with caution, and several other duties as well such as tax returns being filed separately or
bank accounts are being separately managed and as such need to be thoroughly taken care of
to ensure that corporate veil is not removed (Sutton, 2015).

Business Law 4
Bibliography
FindLaw. (2020). OCALA BREEDERS SALES COMPANY v. HIALEAH INC. Retrieved
March 25, 2020, from FindLaw: https://caselaw.findlaw.com/fl-district-court-of-
appeal/1334181.html
Jimerson, C. B., & Snell, B. N. (2016, March 2). The Five Most Common Ways to Pierce the
Corporate Veil and Impose Personal Liability for Corporate Debts. Retrieved March
25, 2020, from Lexology: https://www.lexology.com/library/detail.aspx?g=4ff8ebf0-
4bca-426e-8273-758140f6d0eb
Sutton, G. (2015, 09 23). What is the Corporate Veil? Retrieved March 25, 2020, from
Corporate Direct: https://www.corporatedirect.com/running-a-business/piercing-the-
corporate-veil-how-to-avoid-it/