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The rubiric needed to make the work better.The submission compares the general characteristics of an LLC and corporation legal entities; however, a clear discussion of how one of these entities would specifically impact the farmer’s market regarding taxation, liability, and ownership/control is not evident. For additional instructions on this aspect, please click on the gray expansion arrow next to the aspect title.The submission generally discusses the general partnership legal entity; however, a clear discussion of how it would specifically impact the farmer’s market regarding taxation, liability, and ownership/control is not evident. For additional instructions on this aspect, please click on the gray expansion arrow next to the aspect title.
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Legal and Ethical Consideration
Olamide Badero
D078
Western Governor University
2/29/2024
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Legal and Ethical Consideration
Two of the Proposed Legal Entity Types for Farmers’ Market Venture
The case of the farmer’s market business raises an important issue of what legal form it
can choose between a corporation and a limited liability company (LLC) in terms of taxation,
liability, ownership, and control. Unlike an individual, a corporation is a separate legal entity
that, therefore, is taxed on the corporate profit. The shareholders, then, can pay taxes on any
dividends they earn, thus resulting in double taxation. On the other hand, shareholders are
provided with limited liability protection such that their wealth is not exposed to the debts and
liabilities of the corporation. However, they are still accountable for their misuse of funds not
covered by the implied exceptions. In a corporation, there is a distinction between ownership and
control. The stockholders own the shares and elect the board of directors who manage the
corporation (Hayden, Bodie, 2020). Powerful decisions are the board’s domain, with the share
proportionally to their ownership proportionality indirectly the bearer’s ownership on the board
provisionally.
The LLC is also favorable because of the flexibility in taxation if the business is run as a
pass-through entity by default. This results in income and fluctuations going through the owner’s
income statement while the LLC management escorts the business from this type of taxation.
This protection is in addition to the limited liability protection to their members as company
owners, shielding themselves as individuals from becoming jointly liable for the company’s debt.
Stake in an LLC as a partnership is maintained by ownership interests in which ownership
structures are less bureaucratic and more flexible than in corporations (Bayern, 2024). Owners
can make the LLC self-managed or appoint managers, letting them decide on the degree of
governance and their needs’ agreements.
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Concerning the farmer’s market business, the decision between a corporation and an LLC
would be influenced by different factors. In such cases, if farmers and retailers want to run to get
external investors then they must define a formal governance structure that is easily controllable.
Possibly a corporation is more operational and management-wise but lacks sharing. In contrast,
when they want to have much flexibility in governance and management and benefit from passthrough taxation and limited liability protection, then LLC is a better option for them. After all,
the choice ought to correspond to the goals and perspectives of all stakeholders, among all the
things that should be considered that endangered the farmer’s market investment, such as
financial risk tolerance, level of involvement, and long-term growth strategies.
General Partnership Legal Entity Type
a. Taxation
In a General Partnership, income taxes are not imposed on the partnership itself at the
entity level. In such a system, profits and losses are not included in the business’s records but
pass through to individual partners to be reported on their tax returns. By segmenting the profits
in this way, shareholders are spared the burden of double taxation that can be seen with
corporations. According to the partnership distribution, every partner involved is responsible for
the taxes on the profits that fall on their share (Love, 2021). Such a contribution can be either in
the direct control of the partners for which tax planning can be done so easily or when the
partners have the flexibility to make their own choices.
b. Liability
In a general partnership, each partner has unlimited personal liability for the debts and
partnership obligations. This implies that partners who cannot honor the partnership debts face
the seizure of their assets in the process. On the contrary to LLCs and corporations, while
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Managing Members are protected from unlimited liability like a corporate shell, Partners’ assets
are not immune to such risks. Finance is associated with this enterprise’s higher level of risk,
with that partners should consider reserves and protection against liabilities in detail.
c. Ownership and Control
A general partnership legal structure typically has the partners own and control the
business equally unless otherwise stated in a partnership agreement. Each partner shall enjoy
equal authority and responsibility in decision-making unless any other agreement provides
otherwise. This keeps the market together and creates an environment in which partners work
together closely to make decisions and manage the day-to-day operations of the farmer’s market
venture. Nonetheless, it is equally important to set the processes of clear communications and
decision-making around the partnership that will have the objective of being the source of the
solution to problems in governance, if any appear.
Making a General Partnership the form of a legal entity leads to pass-through taxation,
unlimited private liability for partners, and shared property and management among partners.
Besides, such a structure gives a certain level of simplicity in taxation, and it encourages
cooperation among partners; still, the downside is that it is accompanied by a higher level of
personal risk borne by the partners. A reliable communication and concretely developed
cooperation pact will not be less vital for mitigating the risk and high possibility of the farmers
market startup.
Legal Obligation Under the Fair Labor Standards Act (FLSA)
The FLSA is a federal law in the USA enacted to regulate minimum wage, overtime pay
eligibility, recordkeeping, and youth employment standards. Among the FLSA basics is the
provision for employers to pay their employees at least the minimum wage required by the
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federal state and to provide overtime pay for hours exceeding 40 within the workweek (Will,
2022). In the presented scenario, the employer must fulfill the FLSA’s overtime pay
requirements. Therefore, bosses and workers at all levels, even simple managers who exceed
their 40 hours per week workload, are entitled to be paid the higher figure of time and a half their
normal wage rate for working these overtime hours. The FLSA did not give exceptions to
different job roles or classifications like that. However, under the FLSA, the principles apply to
all employees who are deemed eligible, regardless of their job title and responsibilities.
Despite the formal claim that the past overtime hours needed are devoted to employee
development or other sorts of training, the FLSA laws reign that those working hours should be
paid in the amount of proper overtime. Therefore, the employer must make sure the total hours,
including the overtime hours worked by any employee, are compensated as per the acts of the
FLSA. An employer’s disobedience to the FLSA rules regarding overtime pay may lead to
serious legal issues, such as fines, penalties and even lawsuits from employees who claim to
have been affected by the violation. Therefore, the manager should always realize this
arrangement and follow the guidelines of FLSA. Otherwise, he will be responsible for legal
problems and inequality in workers` conditions.
Ethical Obligation Employees
An ethical responsibility distinct from the legal obligation described in the Fair Labor
Standards Act (FLSA) is the concern of employers about the treatment of their employees and
the assurance of fairness and equity in the workplace. While employers should go beyond merely
registering with labor codes, they also owe an ethical dedication to creating an environment that
promotes fairness, equity, and respect for all employees. Such a thing is related to the dignity of
workers of the enterprise, their rights protection, and their accordance with the laws. Also, it is
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the employer’s duty not to discriminate, harass, or exploit them.
The employer asks the general managers, particularly female managers, to always work
outside their regular hours without settling for their previous compensation status under the guise
of the management training and/or career development program. This is a demand, not only, a
violation of the legal obligations stipulated under the FLSA but also an ethical issue. In this
regard, it’s hard to argue against the point of people’s working hours equality and equity. The
employers are, under an ethical dimension, obliged to pay jobholders fair compensation for their
work and hours of overtime irrespective of gender or any other traits. Consequently, they are not
only showcasing their concern for the mental and emotional health of the affected employees but
also lack trust in the employer as a respectable and credible entity. The company’s directive of
distributing disproportionately more overtime work to female managers can only reinforce the
ethical concerns already raised regarding gender discrimination or workplace bias. Such
organizations should guarantee that gender equality and fair treatment do not discriminate
against or show unequal treatment towards anyone, and if there is any such incidence, should be
promptly and efficiently addressed
The employees have one ethical responsibility to remind themselves and their colleagues
of safety standards and maintain the highest well-being in the workplace. The employees have to
be committed to adhering to safety regulations and protocols that the employer has put in place,
and this includes proper lifting and carrying techniques as well as the use of proper safety gear to
reduce the burden of injuries. In the present situation, workers are sometimes asked to move
heavy boxes of products into and out of storage without using hand trucks which, in turn, might
further result in injury. The employer will keep safe surroundings and equipment, and employees
still need to make their minds known about any unsafe working practices and tasks they do not
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think are safe. Moreover, employees also have an ethical obligation to voice out when they
notice any forms of workplace misconduct such as favoritism, harassment, unethical behavior,
and sexism among others to the best channels internally within the organization. By calling out
the bad practices, supporting an organization that is guided by values of integrity and respect,
and being in a position to create a safe environment for themselves and their colleagues to thrive,
employees hence contribute positively to the formation of an ethical workplace.
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References
Bayern, S. (2024). The possibilities of modern legal organizations. In A Research Agenda for
Organizational Law (pp. 67–124). Edward Elgar Publishing.
https://doi.org/10.4337/9781803920009.00010.
Hayden, G. M., & Bodie, M. T. (2020). The corporation reborn: from shareholder primacy to
shared governance. BCL Rev., pp. 61, 2419.
https://scholar.smu.edu/cgi/viewcontent.cgi?article=1814&context=law_faculty.
Love, M. (2021). Where in the world does partnership income go? Evidence of a growing use of
tax havens. Evidence of a Growing Use of Tax Havens (December 14, 2021).
https://www.law.berkeley.edu/wp-content/uploads/2022/03/2022-Michael-Love.pdf.
Will, J. H. (2022). Following in the Footsteps of Fair Pay: The Case for Exempt” Time
Transparency” and the Mandatory Disclosure of White-Collar Work Hours. Geo. JL &N
Pub. Pol’y, pp. 20, 671. https://www.law.georgetown.edu/public-policy-journal/wpcontent/uploads/sites/23/2022/09/GT-GLPP220048.pdf.
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