Ch

Ch. 5 – Organizing the Business to Limit Liability

1) What are the primary forms of business organization?

2. From a risk-management standpoint, which form or forms of business organization serve to protect the owners from personal vicarious liability for torts committed by employees acting within the scope of their employment and from business debts?
3. Can your chosen form of business protect you from personal liability for the consequences of your own negligence or intentional torts?
4. What are owners of a corporation called?
5. Regardless of its form, what duties does every business owe to its employees?
6. What is the alter ego doctrine?
7. What test does the Internal Revenue Service (IRS) apply to determine whether a person is an independent contractor or an employee of a business?
8. Does the IRS have the authority to determine that a person is (or was) an employee of the business rather than an independent contractor even if the business had an agreement signed by that worker stating that she is an independent contractor?
9. What difference does it make to a business whether the IRS considers a worker an employee of the business of an independent contractor?
10. Congratulations! You have been hired as a new assistant manager for an FBO. You learn that the business treats its aircraft salespersons, flight instructors, and aircraft mechanics as independent contractors. You ask your boss why and are told: “It saves us having to do all the paperwork and bear the extra expense of withholding payroll taxes and having to pay for workers’ compensation insurance and unemployment compensation insurance premiums, and it keeps them from getting any ideas about joining a union.” Do you think there’s something wrong with that? Reply thoughtfully and in detail, as a model manager would.
11. In a corporation,
    1. What decisions do shareholders have the right to make?
    2. What decisions do the board of directors typically make?
    3. What decisions do corporate officers typically make?