Chapter 17 and 18: Legal and business strategies Flashcards
What is a sole Proprietorship?
Business is owned and operated by one person
What are the benefits of sole proprietorship?
Extensive meetings for strategy not necessary
No formal paper work
Flow through taxatiojn
What are disadvantage to sole proprietorship?
Financial loss and liabilities are sole responsibility of the owner. No corporate veil
Difficult to raise capital
Business cannot function without owner
What is a Partnership?
Two or more people that agree to operate a business and share profits and losses
Should have legal documents, not required.
What is a general partnership?
joining of 2 or more individuals to own and operate a business.
Can be divided equally or unequally.
What is the difference between an expressed and implied partnership?
Expressed- created with contract between parties
Implied- created and recognized by courts if individuals act as parters.
What is disadvantage of partnership especially for minority owner?
still personally liable for company losses
Minority partners can be presonally liable for greater share then what they ownj
what is a limited partnership vs a general partner?
Limited only liable for your direct financial contribution. But limited partner have no formal managerial input
General partner retain personal liability.
What is an advantage to partnergip?
Flow through taxation
what is a corporation>
Create a separate Entity from the investors and operators of the business.
What is the benefit of a corporation?
Protects investors from personal liability
What is the disadvantage of a corporation?
much more burdensome than a sole proprietorship, formed in the secretary of state
Name cannot already be used.
What is a subchapter S corporation?
Profits flow through the business to the shareholders and are taxed as ordinary income.
Are shielded from corporate liability beyond their investment.
Must be based in the US and can have total of 100 investors, and can only issue one form of stock
Lots of paperwork
What are most common used by Personal trainers?
Sole Proprietorship and partnership
Then S Corp
What are limited liabilities and partnerships?
Profits flow through investors that are taxed as ordinary income.
Corporate veil for personal liability.
Simpler paperwork
No national standards, can be different state to state and rules may be decided through courts
What are C corporations?
Largest companies in the world.
Can seek investors and conduct business around the world.
Annually file extensive paperwork
Double taxed, because company is taxed, then profits go to shareholders and they pay taxes.
Advantage and disadvantage of Sole proprietorhsip?
Adv- easily created and managed, flow through taxation
Disadv- Personal liab, raising capital
Advantage and disadvantage of Partnership?
Adv: easily created, flow through taxation
Disadv- managment disputes, Personal liability except limited Liability partner
Advantage and disadvantage of S- Corp
Adv- flow through taxation, Limited Liability
Disadv- Limited # of investors, cost of formation and operation
Advantage and disadvantage of LLC/LLP
adv- Flow through taxation, limited liab
Disadv- undefined operating standards in states
Advantage and disadvantage of C Corp
Adv- Limited Liability, Unlimited investors
Disadv- cost of formation and operation, double taxation
What are advantage to Franchise?
- operating the rights to an established brand
- access to business and operating systems and national advertising
- ability to control business
- Franchisers will provide training
What are the disadvantages to a Franchise?
- upfront costs and ongoing costs to maintain. annual costs of maintaining the franchise
- the association with a particular brand
- Have to agree to follow the franchise operating model.
What are characteristics of an employee?
Employee regularly works for their employers.
Employees are trained
Employers withhold taxes
Pay for unemployment and workers comp
What are characteristics of an independent contractor?
Negotiate the job and final compensation. then once the work is paid they get their money and move on.
What should be signed with the initial contract?
a Waiver
What are the elements necessary to create a binding agreement?
- offer and acceptance with mutual agreement of terms
- Consideration, ex money
- Legality
- ability for both parties to partake in it in regards to legal age and mentality.
What are the 4 elements for a plaintiff to establish negligence?
- The dependent had a duty to protect the plaintiff
- The defendant failed to uphold the standard of care
- Damage or injury to the plaintiff occurred
- The damage or injury was caused by defendants breach of duty
- The dependent had a duty to protect the plaintiff
What is vicarious liability?
Employers are responsible for the actions of their employees`
Waivers do not protect the trainer from what?
Gross negligence- action that demonstrates reckless or willfull behavior.
What is contributory negligence?
Prevents a plaintiff in a lawsuit that played a part in the injury from receiving reimbursement.
What is comparative negligence
Most states don’t use.
If multiple parties caused injuries the court will apportion guilt and award for damages. `
What is an agreement to participate?
usually incorporated into other documents. Designed to protect trainer from client claiming to be unaware of the risks of physical activity. Typically used for class settings.
What is informed consent?
Demonstrates that a client acknowledges that they have been informed about the risks associated. It is used to show the potential benefits and dangers.
What are inherent risks?
Even if everything is done properly there are still risks for something,
What are the legal responsibilities of the Trainer>
- check the facilities
- the equipment, AED, CPR,
- supervision
- instruction
ACE recommends how much insurance coverage?
At least 1 million dollars as coverage
What is Keyman insurance?
Compensate the business for the loss of a person.
What are the 5 steps of risk management?
- risk identification
- Risk evaluation
- Selection of approach for management risk
- Implementation
- Evaluation
What are the 4 approaches to management risk?
- Avoidance: Remove the possibility of danger or injury.
- Transfer: move the risk to others through waivers
- Reduction: Modifying the risks by removing part of the activity
- Retention: Retain certain risks
What should you do for a low or insignificant risk?
What about or a High risk and high Occurrence?
What about High Risk low occurrence?
Retain it.
Avoid
Transfer it
what is the direct employee model?
a Trainer is paid one rate when working on scheduled shift and another when working as a trainer.
What is the independent contractor model?
Trainer contracts his services to a health club or training studio.
Trainer pays a fee to rent the space
Trainer gets to decide how much they want to charge.
What are the components of a business plan?
- Executive Summary
- Business Description
- Marketing Plan
- Operational Plan
- Risk analysis
- Decision making criteria
What are the parts of an executive summary>
- business concept
- Financial info
- Current business position
- Major achievments
What is in the business description?
- Identify operating model
- describe industry specific to local market
- List members of the management team
What are the categories for risk analysis?
- Barriers to entry
- Competitive
- Staffing
What is in a SWOT analysis?
Strength
Weakness
Opportunity
Threat
When training in a clients home what sort of music can you use?
Clients must provide their own music
`What is flow through taxation?
In sole proprietorships and partnerships, profits are taxed at lower personal rates rather than higher corporate rates. In addition, yearly losses can flow-through to be used by the owner to offset profits from other income.
How are most buying decisions that are service related driven?
Emotionally
