I. Summary of Applicable Facts: Career Institute of America, Inc. (CIA), a non-for profit corporation formed a year ago in Delaware by its current CEO who is the majority owner and controls the company’s business. CIA is an online and classroom education organization that provides training to students in the United States auto industry, one of the country’s largest industries. Whereas, the majority of CIA’s income is from the online training courses, CIA did receive a retraining grant from the U.S. Department of Labor for the training they are currently providing and this grant is bestowed to non-profit educational organizations. Yet, the grant will not be renewed and any forthcoming funds will have to be earned through tuition.
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He has concerns that the current contract that are used to hire the instructors properly recorded that they are independent contractors not employees.
II. Issues:
A. What form of business organization would be most suitable for CIA?
B. How can CIA’s instructor contracts accurately depict the status of the instructors?
III. Laws:
A. Business Organization Law
When deciding to incorporate in Delaware a business owner may register their business as a corporation, limited liability company (LLC), professional service or a nonprofit association. Although, a business owner may open a sole-proprietorship or a partnership these choices will not be considered because they do not provide limited liability protection for the business owner. Limited liability is protection to the business owner just like a corporation. Business owners are protected from personal liability for business debts and claims. Meaning, it the business cannot pay a creditor, such as a supplier, landlord or lender, the creditor cannot come after the LLC member’s house, car or other personal …show more content…
An independent contractor has more control over their hours and schedule. An independent contractor makes quarterly federal and state income tax deposits, pays the whole contribution of Social Security and Medicare taxes and purchase his or her own insurance and benefits. Independent contractors also work for more than one employer and have specialized training. Whereas, an employee is told how their job is to be performed and what their schedule will be. In addition, the employer contributes to half of the payment of the employee’s benefits, personal income tax, workers’ compensation, as well as future unemployment insurance (Celine, February 2012).
IV. Analysis
A. Business Organization
As a current non-profit organization, CIA, should eliminate its status as such. Because, CIA pursues to acquire revenues and provide its services on a fee basis, this does not meet the requirements as a non-profit institution. CIA, can select to reorganize in Delaware as a corporation or a limited liability company (LLC). CIA’s owner will gain limited liability protection when establishing either a corporation or an LLC. The process to register for a corporation is very comparable to that of
He has concerns that the current contract that are used to hire the instructors properly recorded that they are independent contractors not employees.
II. Issues:
A. What form of business organization would be most suitable for CIA?
B. How can CIA’s instructor contracts accurately depict the status of the instructors?
III. Laws:
A. Business Organization Law
When deciding to incorporate in Delaware a business owner may register their business as a corporation, limited liability company (LLC), professional service or a nonprofit association. Although, a business owner may open a sole-proprietorship or a partnership these choices will not be considered because they do not provide limited liability protection for the business owner. Limited liability is protection to the business owner just like a corporation. Business owners are protected from personal liability for business debts and claims. Meaning, it the business cannot pay a creditor, such as a supplier, landlord or lender, the creditor cannot come after the LLC member’s house, car or other personal …show more content…
An independent contractor has more control over their hours and schedule. An independent contractor makes quarterly federal and state income tax deposits, pays the whole contribution of Social Security and Medicare taxes and purchase his or her own insurance and benefits. Independent contractors also work for more than one employer and have specialized training. Whereas, an employee is told how their job is to be performed and what their schedule will be. In addition, the employer contributes to half of the payment of the employee’s benefits, personal income tax, workers’ compensation, as well as future unemployment insurance (Celine, February 2012).
IV. Analysis
A. Business Organization
As a current non-profit organization, CIA, should eliminate its status as such. Because, CIA pursues to acquire revenues and provide its services on a fee basis, this does not meet the requirements as a non-profit institution. CIA, can select to reorganize in Delaware as a corporation or a limited liability company (LLC). CIA’s owner will gain limited liability protection when establishing either a corporation or an LLC. The process to register for a corporation is very comparable to that of