Ch. 16 Legal Guidelines and Business Considerations Flashcards

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1
Q

Typically, what structures do for-profit businesses operate under?

A
  • Sole Proprietorship (majority)
  • Partnership
  • Corporation
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2
Q

What is a sole proprietorship?

A
  • Business owned and operated by one person
  • Does not require any formal paperwork and minimal ongoing paperwork is necessary (comparatively) to sustain the business
  • Profits of business belong to owner, but financial losses and liabilities are also the sole responsibility of the owner
  • Does not have a corporate veil (can wreck business and personal finances)
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3
Q

What is a corporate veil?

A
  • Shields the actions of the business from the personal responsibility of the owner, even if the owner conducts business under a different company name
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4
Q

What is a partnership?

A
  • 2 or more people who agree to operate a business and share profits and losses
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5
Q

What is a general partnership?

A
  • Joining of 2 or more individuals to own and operate a business
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6
Q

What is an implied partnership?

A
  • Individuals act as partners (such as by sharing a company checking account or jointly signing for a business loan)
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7
Q

What is a limited partner?

A
  • An individual who retains no legal liability beyond his or her initial investment and does not have any formal input regarding partnership operations
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8
Q

What does flow-through taxation refer to?

A
  • Financial profits and losses flow from the business directly to the investors. The business does not pay any taxes; rather, business profits are taxed on the investors’ individual tax return and losses can be utilized by the investors to offset other personal liability
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9
Q

What is a corporation?

A
  • A legal entity, independent of its owners and regulated by state laws; any number of people may own a corporation through shares issued by the business
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10
Q

What does the corporate veil protect investors from?

A
  • Personal liability
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11
Q

What are the main corporation types?

A
  • Subchapter S-corporations
  • Limited liability companies (LLCs)
  • Limited Liability partnerships (LLPs)
  • Franchise operations
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12
Q

What is a subchapter S-corporartion?

A
  • A corporation that does not pay any income taxes. Instead, the corporation’s income or losses are divided among and passed through to its share holders
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13
Q

What are some pros and cons of S-corps?

A

Pros

  • Profits flow through the business to the shareholders and are taxed as ordinary income
  • Shareholders are shielded from personal liability (beyond their investments)

Cons

  • Must be based in the US and can only have up to 100 total investors
  • Can only issue one form of stock, meaning that every share must have the same voting rights and divided allotments
  • Extensive paperwork
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14
Q

What is a C-Corporation?

A
  • A corporation that is designed to operate in multiple countries and with various types of investors
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15
Q

What is the difference between an employee and an independent contractor?

A
  • Employees “regularly” work for their employer

- Independent contractors typically are hired on a short-term basis to perform a specific or series of tasks

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16
Q

What elements are necessary to form a binding contract?

A
  • An offer and acceptance with a mutual agreement of terms
  • Consideration (an exchange of valuable items, such as money for services)
  • Legality (acceptable under the law)
  • Ability of the parties to enter into a contract with respect to legal age and mental capacity
17
Q

What does the statute of frauds refer to?

A
  • A contact that must be in writing in order to be enforceable
18
Q

What is negligence?

A
  • Failing to perform as a reasonable and prudent person would under similar circumstance
  • For PTs, a reasonable and prudent person is someone who adheres to the established standard of care, or expected behavior for a professional faced with similar circumstances
19
Q

What are two acts that result as negligence as a PT?

A
  • PT failing to act (act of omission)

- PT acting inappropriately (act of commission)

20
Q

What are the 4 elements that a plaintiff must establish to substantiate a charge of negligence in court?

A
  • The defendant had a duty to protect the plaintiff from injury
  • The defendant failed to uphold the standard of care necessary to perform that duty
  • Damage or injury to the plaintiff occurred
  • The damage or injury was caused by the defendant’s breach of duty (proximate causation)
21
Q

What is an agreement to participate?

A
  • Designed to protect the PT from a client claiming to be unaware of the potential risks of physical activity
  • Should detail the nature of the activity, the potential risks to be encountered, and the expected behaviors of the participant
22
Q

What is an informed consent form?

A
  • Demonstrates that a client acknowledges that he or she has been specifically informed about the risks associated with the activity in which he or she is about to engage
  • Primarily intended to communicate the potential benefits and dangers of the program or exercise-testing procedures, as wells as possible discomforts involved and potential alternatives
23
Q

What is vicarious liability?

A
  • Legal term meaning that employers are responsible for the workplace conduct of their employees
24
Q

What is a waiver?

A
  • Voluntary abandonment of a right to file suit; not always legally binding
25
Q

What is gross negligence?

A
  • An action that demonstrates recklessness or a willful disregard for the safety of others
  • Occurs when someone deliberately acts in a manner that extends beyond the scope of employment or fails to meet the accepted standard of care
26
Q

What is contributory negligence?

A
  • Laws preventing a plaintiff in a lawsuit who has played some role in the injury from receiving any remuneration
  • Not used in majority of states
27
Q

What is comparative negligence?

A
  • A system used in legal defenses to distribute fault between an injured party and any defendant
28
Q

What is the statute of limitations?

A
  • A formal regulation limiting the period within which a specific legal action may be taken
29
Q

Why is it important to keep current and accurate records for every client?

A
  • Information that is not written down did not occur or exist according to the court system
30
Q

What is the Health Insurance Portability and Accountability Act?

A
  • Prevents professionals from printing, emailing, or discussing a client’s health information unless the client has granted written permission to do so
31
Q

What is one of the most important things a PT can do to ensure safety for their clients?

A
  • Regularly inspect facilities and equipment and review protocols regarding supervision and instruction
32
Q

What is the difference between general supervision and specific supervision?

A
  • General supervision: involves overseeing a group of people, such as when a group fitness instructor leads a large class
  • Specific supervision: occurs when an individual is supervised while performing a specific activity such as what typically occurs during a personal-training session
33
Q

What is an umbrella liability policy?

A
  • Insurance that provides additional coverage beyond other insurance such as professional liability, home, automobile
34
Q

What do the best PT insurance policies cover?

A
  • Cost of a legal defense

- Any claims awarded

35
Q

What liabilities are often excluded in exercise professional policies?

A
  • Abuse
  • Molestation
  • Cancer (resulting from tanning)
  • Libel
  • Slander
36
Q

What is the general 5 step risk management protocol?

A
  • Risk identification (specification of all risks that may be encountered
  • Risk evaluation (review risk for probability of risk and severity)
  • Selection of an approach for managing each risk
  • Implementation (institute the plan)
  • Evaluation (continually assess the outcome of risk-management endeavors)
37
Q

What are the selection of an approach for managing risk consist of?

A
  • Avoidance (remove possibility of danger and injury by eliminating activity)
  • Transfer (move the risk to others through waivers, insurance policies, etc.)
  • Reduction (modify the risks by removing or altering part of the activity)
  • Retention (there are risks that will be retained, especially if the removal of the risk would eliminate a potential benefit)
38
Q

When an incident occurs, how should a PT respond?

A
  1. ) Ensure the safety of all individuals involved
  2. ) Complete an incident report (note any facts related to the incident and solicit information from any witnesses)
  3. ) Retain information in a secure location for future reference