Business Organization and Alternative Dispute Resolution

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Introduction

The researcher aspires to start a Limited Liability Company with two other people. The researcher opts for a Limited Liability Company because of the benefits that accompany the business venture. In the course of the day-to-day business operations, businesses encounter various issues that require legal intervention. Business owners should decide whether to use legal or alternative dispute resolutions in resolving their disagreements.

In Limited Liability Company, owners should have abiding agreement on the terms of their engagement. Similarly, they should have agreements with vendors they transact with, in their daily business endeavors. The contracts should entail a clause that indicates the venue for litigation that is suitable for both parties. These agreements are important as they act as framework for resolving disputes.

Advantages and disadvantages of Limited Liability Company Over other legal Business forms

There are different legal requirement for different forms of business. In the United States of America, sole proprietorship business requires the following legal documents to operate. Sole proprietorship business should have form 1040, which contains Individual Income Tax Return. This form reflects the owner’s compliance in submitting taxes. Other essential forms include schedule SE for Self-Employment Tax, Form 4562 for Depreciation and Amortization, Form 8820 that include the Expenses for Business Use of your home.

Lastly, an employment form is required in case the business owner has hired people to assists in managing the business. Partnerships are required to posses all the forms for sole proprietorship. However, in addition, they should possess Schedule E for Supplementary Income and Loss, Form 1065 for Partnership Return Income and Form 1065 K-1 for partner’s Share of Income, Credit, and Deductions. Limited Liability Company operates like a partnership. However, business owners have limited liability and therefore, their personal assets are not at risk in case of any business liability or debt (Davidson, 2000).

The researcher would like to start a Limited Liability Company. Starting a Limited Liability Company will be easier for the researcher in raising the funds required to start it, unlike in the case of sole proprietorship form of business. The researcher will share in raising the capital that is required to start the business with the other five partners whom he aspires to join hands in starting the business. The business is likely to excel owing to the complementary skills of the three partners. Some of the two owners are accountants; one is an engineer and the other two a marketer and a specialist in hospitality industry. The combination makes the partnership excellent.

The five shareholders will combine their skills and operate the business efficiently. In addition, the three partners will first discuss before implementing important issues and arrive at an appropriate decision after appropriate consultation. The discussion of important issues affecting the venture will help the owners avoid making serious mistakes, as it may be the case in sole proprietorship. On the other hand, the shareholders are likely to encounter some challenges that accompany joint ventures such as disagreement. However, the shareholders will enjoy the legal immunity that accompanies Limited Liability Company. This is because in case of any business liability or debt the shareholders assets are not at risk as in the case of sole proprietorship or partnership form of business.

ADR method Most Appropriate for Resolving the Company Disputes

In partnership and limited Liability businesses, a memorandum of understanding or a legal agreement form is required to specify duties and responsibilities for each partner. In course of the day-to-day business operations, the shareholders or business partners encounter various disagreements that require legal or alternative dispute resolutions. There are four kinds of ADR, which are arbitration, mediation, conciliation and Negotiation.

Conciliation is a method of resolving conflicts where the disputing persons use a conciliator who meets with the concerned persons separately and facilitates communications as well as looking for appropriate solutions for the disputing parties. Mediation on the other hand involves a third party who acts as a mediator. The mediator facilitates the discussion in a comportment, which addresses the parties’ issues. Negotiation is the process whereby two parties try to reach a compromise, resolve a dispute or reach an understanding through a dialogue. Finally, arbitrary is a legal form of resolving conflicts outside the court.

An arbitrator assesses the proof presented by the parties engaged in the conflict and makes a decision, which is abiding and legal. Amicable dispute resolutions are imperative for the success and future sustainability for business entities. Thus, business owners should be knowledgeable on when to use ADR or legal mechanism in managing business disputes (Martin, 2007).

Partnership has legal agreement that outlines how decisions are arrived at, profit and losses shared, strategies to resolve disputes, how new partners will be incorporated, as well as the steps to be followed in dissolving the partnership. However, in case of disputes the partners will opt to use ADR to solve their disputes. The partners will prefer use of negotiations in resolving the dispute as every partner will feel comfortable working with the rest once the disputes are resolved, unlike other means such as arbitrary that are legal abiding and decision arrived may not favor future cooperation (Kubasek, Browne, Herron, Giampetro-Meyer, Barkacs, Dhooge & Williamson, 2012).

Litigation Venue

In the contract that the Limited Liability Company will engage with its vendors, the contract will have a clause that specifies the venue for litigation as the court that specializes in dealing with business disputes. This clause will make it possible for the court to make a competent ruling where every party involved will be satisfied with the court decision. Similarly, the clause can consider the venue as the county where the defendant does business. The later clause will make it more convenient for the defendant to avail himself or self during the court proceedings.

In conclusion: Various legal forms of business have diversified benefits. Limited Liability Company is the best legal form of business to start, as the shareholders’ assets are safe from business liability or debt. Sole proprietorship and partnership are not appropriate business venture because in case of any business liability or debt, the owners’ assets are at risk. Shareholders should engage in legally abiding agreements between themselves, as well as with their vendors to provide a platform for resolving the differences.

The contracts should specify the venue of litigation that is most suitable for all parties involved. In case of any disagreements, the owners and vendors should first opt for ADR before contemplating pursuing legal lawsuits. Some of the ADR solutions that they can opt entail negotiations, conciliation, arbitration and mediation. Negotiation is the most amicable ADR strategy that promotes future cooperation, as every party has an opportunity to negotiate his/her position in reaching a compromise.

Reference List

Davidson, P. (2000). Forms of Business Organizations. New York: Prentice Hall.

Kubasek, N. K., Browne, M. N., Herron, D. J., Giampetro-Meyer, A., Barkacs, L. L., Dhooge, L. J., & Williamson, C. (2012). Dynamic business law (2nd ed.). New York, NY: McGraw-Hill/Irwin.

Martin, J. (2007). Alternative Dispute Resolution. New York: McGraw-Hill.

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Business Organization and Alternative Dispute Resolution

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