Jinyan Wants to Start a New Internet Service Provider Business

question 70

Essay

Jinyan wants to start a new Internet service provider business. Before she does so, however, she wants to ensure that she will be able to afford liability insurance premiums. In that regard, she wants to know how the test of reasonable foreseeability affects the issue of risk management. She has heard conflicting statements. Some suggest that the concept of reasonable foreseeability protects business people from liability. Others suggest that the same concept can unexpectedly lead to the imposition of liability. Which statement is true? Explain your answer.

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Definitions:

Tax Rate

The percentage at which an individual or corporation is taxed, varying by income or profits level and jurisdiction.

Deductions

Amounts that are subtracted from an individual's gross income to reduce the income subject to tax, including various expenses, contributions, and allowances.

Employee Payroll

The total amount due to employees for the work they’ve done, including wages, salaries, and bonuses.

Interest Expense

The cost incurred by an entity for borrowed funds, reflecting the interest payments on debt.