Main Types of Sentence
Absolute discharge: No financial penalty, no conditions.
Conditional discharge: No financial penalty, but if the offender commits a similar crime in the stated period (e.g., 12 months), he can be brought back and given a more severe sentence for the original offence.
Fine: Up to £ 2,000 at magistrates' courts, unlimited in the Crown Court.
Probation order: The offender is placed under the supervision of a probation officer for specified period (often 1 or 2 years), who has to have regular contact with him. Other conditions can also be attached, such as that the offender must take medical treatment.
Community service order: It is expressed in hours (between 40 and 240). The offender carries out socially useful tasks, such as helping with the disabled, or decorating elderly people's houses, at weekends and other spare time.
Suspended sentence of imprisonment: For example, 'nine months suspended for two years'. If the offender commits another offence within the stated period, the original sentence can (at the discretion of judge or magistrate) be activated, and he can be made to serve it after any sentence imposed for the subsequent offence.
Partly suspended sentence of imprisonment: For example, 'twelve months imprisonment, six months suspended for two years'. The offender serves some of the sentence immediately. On release, the other part hangs over him like a suspended sentence.
Imprisonment: The offender goes to prison. The usual remission is one-third of the sentence. He will also, in many cases, become eligible to be released on parole after one-third of his sentence. The grant of parole is discretionary.
Unit 6b Selecting the Legal structure For Your Firm in the usa
SUMMARY
There are many reasons today for owner-managers of small businesses to look at the legal structure of their firms. The changing tax laws and fluctuating availability of capital are just two situations which require alert managers to review what legal structures best meet their needs.
All forms of business organization have advantages and disadvantages.
If you were to make an analogy between starting a business and playing a card game, you might say, "The game is just for fun, but business is business." Well, you would be right. But let's consider some important similarities.
The game requires skill, strategy, planning, and, most important, a thorough knowledge of the rules. Going into business requires skill (the knowledge of your craft or trade), and it also requires strategy and planning. Most important, to be successful in business, you must understand the rules (or the laws) by which you must conduct your business. All planning and strategy must consider the multitude of local, state, and federal laws and business practices that govern the operation of the business.
Before you enter the complex arena of business and the myriad of laws which influence your freedom of choice and mobility of action, you must first choose the legal structure for your business that will best suit your needs and the needs of your particular business. In order to intelligently select the legal structure for your business, you must ask yourself, "What are my alternatives?" So, let's now look at the nature of various legal business structures.
There are three principal kinds of business structures: the proprietorship, the partnership, and the corporation. Each has certain general advantages and disadvantages, but they must all be weighed to reflect your specific circumstances, goals, and needs. The sole proprietorship is the first form we'll consider.
THE SOLE PROPRIETORSHIP
The sole proprietorship is usually defined as a business which is owned and operated by one person. To establish a sole proprietorship, you need only to obtain whatever licenses you need and begin operations. Hence, it is the most widespread form of small business organization.
Advantages of the Sole Proprietorship
Base of formation. There is less formality and fewer legal restrictions associated with establishing a sole proprietorship. It needs little or no governmental approval and is usually less expensive than a partnership or corporation.
Sole ownership of profits. The proprietor is not required to share profits with anyone.
Control and decision making vested in one owner. There are no co-owners or partners to consult. (Except possibly your spouse.)
Flexibility. Management is able to respond quickly to business needs in the form of day to day management decisions as governed by various laws and good sense.
Relative freedom from governmental control and special taxation.
Disadvantages of the Sole Proprietorship
Unlimited liability. The individual proprietor is responsible for the full amount of business debts which may exceed the proprietor'stotal investment. This liability extends to all the proprietor's assets, such as house and car. Additional problems of liability, such as physical loss or personal injury, may be lessened by obtaining proper insurance coverage.
Unstable business life. The enterprise may be crippled or terminated upon illness or death of the owner.
Less available capital, ordinarily, than in other types of business organizations.
Relative difficulty in obtaining long term financing.
Relatively limited viewpoint and experience. This is more often the case with one owner than with several.
NOTE: A small business owner might very well select the sole proprietorship to begin with. Later, if the owner succeds and feels the need, he or she can form a partnership or corporation.
The small business owner is required to wear many hats, but no one can be expected to be a lawyer, certified public accountant, marketing specialist, production engineer, environmental specialist, etc. Therefore, you should get the facts before making decisions. When necessary and if possible, you should also get professional counsel to help you avoid misunderstanding technical or legal issues and avoid making bad decisions and false starts that require backtracking and added expense. This is especially true when you are deciding what legal form to adopt.
THE PARTNERSHIP
The Uniform Partnership Act, adopted by many states, defines partnership as "an association of two or more persons to carry on as co-owners of a business for profit." Though not specifically required by the Act, written Articles of Partnership are customarily executed. These articles outline the contribution by the partners into the business (whether financial, material or managerial) and generally delneate the roles of the partners in the business relationship. The following are example articles typically contained in a partnership agreement:
Name, Purpose, Domicile
Duration of Agreement
Character of Partners ( general or limited, active or silent)
Contributions by Partners ( at inception, at later date)
Business Expenses ( how handled)
Authority ( individual partner authority in conduct of business)
Separate Debts
Books, Records, and Method of Accounting
Division of Profits and Losses
Draws or Salaries
Rights of Continuing Partner
Death of a Partner ( dissolution and winding up)
Employee Management
Release of Debts
Sale of Partnership Interest
Arbitration
Additions, Alterations, or. Modifications of Partnership Agreement
Settlements of Disputes
Required and Prohibited Acts
Absence and Disability
Some of the characteristics that distinguish a partnership from other forms of business organization are the limited life of a partnership, unlimited liability of at least one partner, co-ownership of the assets, mutual agency, share of management, and share in partnership profits.
Advantages of the Partnership
Ease of formation. Legal informalities and expenses are few compared with the requirements for creation of a corporation.
Direct rewards. Partners are motivated to apply their best abilities by direct sharing of the profits.
Growth and performance facilitated. In a partnership, it is often possible to obtain more capital and a better range of skills than in a sole proprietorship.
Flexibility. A partnership may be relatively more flexible in the decision making process than in a corporation. But it may be less so than in a sole proprietorship.
Relative freedom from government control and special taxation.
Disadvantages of a Partnership
Unlimited liability of at least one partner. Insurance considerations such as those mentioned in the proprietorship section apply here also.
Unstable life. Elimination of any partner constitutes automatic dissolution of partnership. However, operation of the business can continue based on the right of survivorship and possible creation of a new partnership. Partnership insurance might be considered.
Relative difficulty in obtaining large sums of capital. This is particularly true of long term financing when compared to a corportion. However, by using individual partners' assets, opportunities are probably greater than in a proprietorship.
Firm bound by the acts of just one partner as agent.
Difficulty of disposing of partnership interest. The buying out of a partner may be difficult unless specifically arranged for in the written agreement.
THE CORPORATION
The corporation is by far the most complex of the three business structures.
As defined by the Chief Justice Marshall's famous decision in 1819, a corporation " is an artificial being, invisible, intangible, and existing only in contemplation of the law." In other words, a corporation is a legal entity, distinct from the individuals who own it.
Formation
of
the
Corporation
A corporation usually is formed by the authority of a state government. Corporations which do business in more than one state must comply with the Federal laws regarding interstate commerce and with the state laws, which may vary considerably.
The procedure ordinarily required to form a corporation is that, first, subscriptions for capital stock must be taken and a tentative organization created. Then, approval must be obtained from the Secretary of State in the state in which the corporation is to be formed. This Approval is in the form of a charter for the corporation, stating the powers and limitations of the particular enterprise.
Advantages of the Corporation
Limitations of the stockholder's liability to a fixed amount of investment. However, do not confuse corporate liability with appropriate liability insurance considerations.
Ownership is readily transferable.
Separate legal existence.
Stability and relative permanence of existence. For example, in the case of illness, death, or other cause for loss of a "principal" (officer or owner), the corporation continues to exist and do business.
Relative ease of securing capital in large amounts and from many investors. Capital may be acquired through the issuance of variuos stocks and long term bonds. There is relative ease in securing long term financing from lending institutions by taking advantage of corporate assets and often personal assets of stockholders and principals of guarantors. (Personal guarantees are very often required by lenders.)
Delegated authority. Centralized control is secured when owners delegate authority to hired managers, although they are often one and the same.
The ability of the corporation to draw on the expertise and skills of more than one individual.
Disadvantages
of the Corporation
Activities limited by the charter and by various laws. However, some states do allow very broad charters.
Manipulation. Minority stockholders are sometimes exploited.
Extensive government regulations and required local, state, and federal reports.
Less incentive if manager does not share in profits.
Expense of forming a corporation.
Double tax - income tax on corporate net income (profit) and on individual salary and dividends.