Legal Issues Affecting Joe

Beginning a sole proprietorship is one of the easiest forms of starting a business. A sole proprietorship is not a legal entity, with the name of the business referring to the individual who owns the business and is legally responsible for its debts. To set up a sole proprietorship, an individual such as Joe must only register his name and secure local licenses. While these attributes make a sole proprietorship very attractive, there are other legal issues that will impact Joe due to the sole proprietorship that will not be easy or attractive at all.

Fraud

First, the IRS is likely to prosecute Joe if he fails to file his tax returns. Any income earned by a sole proprietorship is considered income earned by its owner, and is indistinguishable as such. The IRS requires that Joe file tax returns and detail which expenses are business expenses, and remit taxes on any income earned by the business. Joe may actually be able to file a loss considering his mistake so early after starting his demolition business, but he must still file regardless.

On the other hand,after Joe began his destruction company, from his actions, Joe has violated the law in several sections of the law. Joe failed in his actions because of his negligence and failed to observe the due diligence.

Negligence

The official legal definition of negligence is “failure to use reasonable care, resulting in damage or injury to another” (Oxford University Press, 2016). Joe was commissioned to demolish a customer’s house at 1200 Serenity Lane, but in his excitement at retaining his first job, demolished a home at 1234 Serenity Lane. He failed utterly to exercise reasonable care, and in that failure, resulted in considerable damage to another’s personal property(FindLaw, 2016).

There are, generally, four elements involved in proving negligence. The first is proving that the defendant had a duty to the plaintiff. This is clearly true, as Joe was commissioned by the plaintiff to perform a job. Second is breach. The plaintiff must be able to show that the defendant breached that legal duty by acting in a certain way. This is also true, as Joe failed to demolish the correct house. Third is causation. This element must show that it was the defendant’s actions that caused the problem. This is also true, as Joe failed to look closely at his instructions, and went elsewhere. Finally, the fourth element is damages. The plaintiff must show that they were harmed in some way by the defendant’s actions (FindLaw, 2016).

Due Diligence and Duty of Care

Due diligence and/or duty of care refer to the standard in which an individual is required to conduct himself according to his position in an organization. The official legal definition: “A director or officer must discharge her duties in good faith and with that degree of diligence, care, and skill that an ordinarily prudent person would exercise under similar circumstances in a like position,” (National Juris University, 2003)is the standard of care which guides Joe, as the company owner, in the process of conducting his business. As the company owner, Joe is required to act with prudence, to ensure that he has all necessary information, and to act, really, beyond the best of his abilities. Joe failed to do this when he acted with haste ad demolished the wrong home. In doing this, Joe failed to conduct his business with the utmost diligence and skill in order to perform the task commission by the client and avoid liabilities and fines that will almost certainly be accrued(National Juris University, 2003).

References

Entrepreneur. (2005, May 11). The basics of sole proprietorships. Retrieved from

FindLaw. (2016). Proving fault: What is negligence? Retrieved from

National Juris University. (2003). The duty of care. Retrieved from

References

Chapman, C.E (2006). Conducting Due Diligence. Practicing Law Institute New York, NY.

Cheek v. United States, 498 U.S 192 (1991). The Seven Circuit upheld conviction

Feinmen, Jay (2010). Law 101. New York: Oxford University Press. ISBN 978-0-19-539513-6

R v. Sault Ste-Marie (city of) [1978] 2 S.C.R. 1299