...Paper The advantages, from a liability standpoint, of a business incorporating and that given a business is going to incorporate…the difference in tax treatment between a C-Corp, Subchapter S and an LLC When businesses are started, one consideration that must be made is what type of business it will be. Many decide to incorporate themselves and look to the advantages they may gain from this. Liability may be one of the biggest advantages to incorporating a business. Along with advantages of incorporating, the tax treatment for different types of businesses will differ whether it is a C-Corp, Subchapter S, or an LLC (limited liability corporation). All of these options will give businesses the best solution to take advantage of different types of tax treatment and the advantages of incorporating. From a liability standpoint, incorporating a business is going to protect the owners’ personal assets from business obligations, debts, and any other business activity. With out the liability protection of incorporating, the business owner is responsible for these obligations, debts, and business activity. Once an owner makes the decision to incorporate, they separate personal assets from the business (“Incorporating a business,”). It is important for owners to incorporate to help protect themselves and their families from taking on the burden of a failing business. How does incorporating protect business owners’ personal assets? Well there are many different...
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...analyzing your situation I believe that incorporating into an S-corporation would be the ideal solution for a number of reasons. To begin with, you expressed concerns about liability of your company with regards to personal assets. By incorporating, you protect your personal assets from being liable for any damages that your company may incur. Incorporation turns your company into its own legal entity, and as such, all profits and losses will stay within the company. As you currently are a sole proprietorship, if a lawsuit did happen and your company’s insurance was unable to cover it, your personal assets would be out there in the open for the plaintiff to take. Incorporating remedies this problem, the only assets that would be able to be touched would be those of the company. You stated that profits before taxes are estimated to be about $600,000. As a sole proprietorship, all income you receive is taxed as personal income, which unfortunately receives one of the highest tax rates. By incorporating, you would be able to benefit from quite a lower tax rate, as corporations are their own legal entity, and as such receive a lower tax rate. Normally corporations have to suffer from something called “double taxation”. Basically, profits stay within a corporation until the board of directors decides to pay out dividends to its shareholders. Corporations get taxed the first time when they receive their profits, this is where it gets the lower corporation tax....
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...In order to mention all the advantages and disadvantages of incorporating a business, first I should try to explain what a corporation is. In 1819, Chief Justice Marshall of the United States Supreme court said: " A corporation is an artificial being, invisible, intangible, and existing only in contemplation of the law." In the Webster's College Dictionary corporation is defined as "an association of individuals, created by law and having an existence apart from that of its members as well as distinct and inherent powers and liabilities." A corporation is divided into many units called shares of stock. The owners of the stock are called stockholders or shareholders. One of the advantages of incorporating a business is that because a corporation has a legal existence, shares can be sold at any time without affecting the operations of the corporation. Also, shares can be bought at any time. Another big advantage of incorporating a business is that corporation have limited liabilities. This means that the corporation is responsible for its own acts and obligations under the law. This characteristic protects the stockholders of the corporation because the only financial loss that they may suffer is limited to the amount invested. Also, the creditors of the corporation can not go beyond the assets of the corporation to satisfy their claims. The stockholders or the shareholders are the ones who have control over the management of a corporation's operation and activities...
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...Corporate Characteristics Proposal One of the most important decisions as a new business owner is deciding what type of structure will be most effective for establishing a business entity. In reviewing different business structures of an organization, Proprietorship, Partnership and Corporation, the Corporation has characteristics an entrepreneur should give valuable consideration to on establishing a new business venture. The different types of stock a corporation can consider issuing and the advantages and disadvantages of forming a corporation is valuable information is considering incorporation. Common Business Structures Proprietorship A business entity owned by one person is called a proprietorship. The company is usually small and can be started with a small amount of capital investment. Sometimes referred to as a Sole Proprietorship, the owner usually has full operational duties of the business and legal responsibilities. The owner can receive all profits of the business but also has legal responsibilities in all the debt of the business even though accounting records are kept separate from the personal records of the owner (Weygandt, Kieso & Kimmel, 2006). Partnership A business entity that is owned by two or more is called a partnership. A partnership is organized much like a proprietorship in that partners share the personal liability of the company’s debts and share the profits of the business. A partnership agreement is usually formed between...
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...decoration of the church and hall; limousine service; floral arrangements and centerpieces; full catering of the event, including professionally decorated cake and hosted bar. The business is currently experiencing a significant decline in hall bookings. During my internship, my goal will be to increase the visibility of this business in the market, thereby increasing future hall bookings. I also plan to begin the process of incorporating the business into a C-corporation. Project Description and Deliverables: I plan to increase Five Star Banquet Hall’s visibility within the English-speaking market via the internet. This will be done in an effort to boost future hall bookings and therefore, revenue. It will be accomplished by creating a company website and increasing the company’s presence on internet directories. Currently, the company has no internet presence whatsoever. Repeat customers and word-of-mouth generate most of the revenue for this business. In addition, I begin the process of incorporating the small business into a C-corporation. Project Activities and Actions: Target Timeline: 1. Research and compare banquet hall websites. February 19, 2007 I will research banquet hall websites to: • Learn about the types of services that other banquet halls offer • Determine possible layouts for our website • Compare pricing information • Obtain ideas about he types of external links possible In my integrated analysis report, I will...
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...Corporation Incorporating your business does not require that you have an attorney, however it is highly recommended. The structure of a corporation is complex. It is more expensive to organize it than the other two business entities. Corporate control lies with the person who has ownership of the most shares of stock. If a single stockholder or a group of stockholders own at least 51% of the stock they can make decisions of policy. The size of the corporation will affect how formally or informally it can operate. Smaller corporations might operate less formally, but still need to keep proper documentation. Stockholders can hold officers of corporations liable for any actions which might have been improper. Advantages of a Corporation: · Shareholders have limited liability for the corporation's debts or judgments against the corporations. · Generally, shareholders can only be held accountable for their investment in stock of the company. ( Note however, that officers can be held personally liable for actions, such as the failure to withhold and pay employment taxes.) · A corporation may deduct the cost of benefits it provides to officers and employees.: · Can elect S corporation status if certain requirements are met. This election enables company to be taxed similar to ...
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...Elaine and Roy Incorporating their home health agency gives them limited liability. The health care field has the potential for malpractice lawsuits, and this can bankrupt a small business. Elaine and Roy will not be personally responsible for the corporation’s debts or obligations. They will create a closely held corporation than may have themselves as shareholders versus a public corporation that would have thousands of shareholders. The process of incorporating begins with choosing which state they will incorporate in. Once that decision is complete, Elaine and Roy will file an article of incorporation or corporate charter with the secretary of state. The article of incorporation must include the name of the corporation, the number of shares it is authorized to issue, the address of their office and name of registered agent, and name and address of each incorporator (Cheeseman, 2010, p. 288). After filing their corporate charter Elaine and Roy will need to hold an organizational meeting with the initial directors and adopt their bylaws, conduct any business needed and elect officers (Cheeseman, 2010, p. 289). After their 10-year anniversary Elaine and Roy want to dissolve their corporation. This is called a voluntary dissolution and an article of dissolution must be filed with the secretary of state. At that point the corporation may not carry on business except to wind up and liquidate its assets and after completion they have terminated the corporation. Toms Landscape ...
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...Student Answer: One of the disadvantages of incorporating a business is that the owners then become subject to liabilities in the event the firm goes bankrupt. Sole proprietorships are subject to more regulations than corporations. In any type of partnership, every partner has the same rights, privileges, and liability exposure as every other partner. Sole proprietorships and partnerships generally have a tax advantage over many corporations, especially large ones. Corporations of all types are subject to the corporate income tax. Instructor Explanation: Chapter 1 Explanation: Ch 1: a is correct, all others are incorrect a: incorporating provides owners limited liability b: sole proprietorship has less regulation than corporation c: In limited partnerships certain partners can be designated general partners and others limited partners with differences in control and liability d. sole proprietorships and partnerships are taxed just once at owner level (pass-through of income to owners) whereas corporation earnings can be double or triple taxed depending on individual or corporate ownership of stock e. S-corps can elect to be taxed as proprietorship or partnership Points Received: 10 of 10 Comments: 2. Question : (TCO G) Aubey Aircraft recently announced that its net income increased sharply from the previous year, yet its net cash flow from operations declined. Which of the following could...
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...Critiquing Sarah Pitts and Rob Kamery’s The Role of Business Ethics: Incorporating Values and Ethics into Business Decisions Markitta Reed Columbia Southern University Introduction An article written by Sarah Pitts and Rob Kamery, published in the Journal of Legal, carefully inquires the special importance of business ethics, a responsibility that has been placed upon educational institutions within the past two decades. In addition Pitts and Kamery also describe what role the government has taken in influencing businesses to comply with making ethical decisions despite traditional business practices. Summary Pitts & Kamery (2003), in their article “The Role of Business Ethics: Incorporating Values and Ethics into Business Decisions,” directs its attention to why it is important for schools to teach students about values and ethics in business. From the results of their investigation out of the 500 largest corporations in the U.S. over half have behaved illegally (Pitts & Kamery, 2003). Before businesses were making headlines for their unethical behavior, business educational institutions were not convinced that business ethics should be a topic of discussion or part of the curriculum. “The invisible hand”, an Adam Smith’s theory contributed immensely to those views that were once held by business schools. However, the lack of involvement had proven to be of great consequence. The absence of educating students in business ethics begin to change following...
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...and procedures. Second, enforcement of existing rules and regulations. Third is incorporating the social responsibility and supply chain sourcing into their strategic objectives (Halbert, 2015). Each of the ways in which United States’ businesses can address the adverse effects of sweatshop labor practices has their own purpose. For the first way which is to adopt firm multinational whistle blowing policies and procedures. An example of it can be observed on strict whistle blowing policies that assist culture when it comes to compliance issue. For the second way which is the enforcement of existing rules and regulations. The example of this can be seen on practices in the Southeast Asia and Thailand, wherein the issues of the 21st century is the main focus. Lastly is the issue on incorporating the social responsibility and supply chain sourcing into their strategic objectives. An example for this, organizations should ensure that their suppliers are accountable to fair labor standards. Considering the effect of worker rights on global and developing economies, take a position on whether or not the United States government should regulate the global workforce of the United States corporations. Justify your response. When it comes to the effect of worker rights on global and developing economies, the United States government should regulate the global workforce of the United States corporations. Through this, they were able to enforce and...
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...Jingwa Pan Introduction US corporations has been using loopholes to minimize their tax reported annually, however, recently president Obama have claimed that some actions should be taken to avoid those corporations taking advantages of these loopholes in tax regulations which have helped them avoid tax duties. Corporations’ taking advantage of such tax duties can cause unexpected results. Other hardworking corporations and individuals may have sense of unfair. This report will analyze the problems that exists about those corporations escape tax duties using the loopholes of tax regulations as well as an explanation on President Obama’s new claim about tax returns. Problem statement Inversions are transactions in which a U.S. company merges with a foreign company overseas to lower its tax burden.(citation 1) So far, tax avoiding corporate inversions lowers companies’ tax bills by allowing them to redomicile overseas even though their core operations and management usually remain in the United States. (citation 2) This is a loophole in tax regulation that corporations will take advantage of it by reincorporate overseas while lawmakers haven’t notice about it. A lot of investors and entrepreneurs has been looking for a good way to reduce the tax duties as much as possible. Since the U.S. has one of the world’s highest top rates which is 35%, although effective rates everywhere can be substantially lower depending on tax breaks and other incentives, the U.S. also is one of the...
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...Business Law & Bankruptcy Assignment #1 New York State Department of State Division of Corporations, State Records and Uniform Commercial Code CERTIFICATE OF INCORPORATION OF Sandra’s, Inc. Under Section 402 of the Business Corporation Law FIRST: The name of the corporation is: Sandra’s, Inc. SECOND: This Corporation is formed to engage in any lawful act or activity for which a corporation may be organized under the Business Corporation Law, provided that it is not formed to engage in any act requiring the consent or approval of any state official, department, board, agency, or other body without such consent or approval first being obtained. THIRD: The county, within this state, in which the office of the corporation is to be located is: Tudorama, Inc. FOURTH: The total number of shares which the corporation shall have authority to issue, and a statement of the par value of each share or a statement that the shares are without par value are: 100, No Par Value. FIFTH: The secretary of state is designated as agent of the corporation upon whom process against the corporation may be shared. The address to which the Secretary of State shall mail a copy of any process accepted on behalf of the corporation is: 123 Main Street, New City, New Tutor 11111 SIXTH: The name and street address in this state of the registered agent upon whom process against the corporation may be served is: Sandra Seller, 123 Main Street, New City, New Tutor 11111 SEVENTH: The date the corporate...
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...Solutions is a consulting business that is dedicated to this task. By working with organizations, Image Solutions helps in the design and implementation of programs that support the business mission and empower human behavior that will contribute to the success of the entire business. Image Solutions clients include individuals as well as businesses, public and private, for profit and not for profit, and early stage ventures and already established companies. In order to fully commit to this mission, Image Solutions must provide a foundation toward creating its own success and sustainability. Therefore, in order for the consulting company to thoroughly consider whether a sole proprietorship, partnership, Limited Liability Company or an S corporation is most suitable for the consultant business, the founder must first comprehend the advantages and disadvantages, while being aware of the legal, liability, and tax implications, of each....
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...Business Law & Bankruptcy Assignment #1 New York State Department of State Division of Corporations, State Records and Uniform Commercial Code CERTIFICATE OF INCORPORATION OF Sandra’s, Inc. Under Section 402 of the Business Corporation Law FIRST: The name of the corporation is: Sandra’s, Inc. SECOND: This Corporation is formed to engage in any lawful act or activity for which a corporation may be organized under the Business Corporation Law, provided that it is not formed to engage in any act requiring the consent or approval of any state official, department, board, agency, or other body without such consent or approval first being obtained. THIRD: The county, within this state, in which the office of the corporation is to be located is: Tudorama, Inc. FOURTH: The total number of shares which the corporation shall have authority to issue, and a statement of the par value of each share or a statement that the shares are without par value are: 100, No Par Value. FIFTH: The secretary of state is designated as agent of the corporation upon whom process against the corporation may be shared. The address to which the Secretary of State shall mail a copy of any process accepted on behalf of the corporation is: 123 Main Street, New City, New Tutor 11111 SIXTH: The name and street address in this state of the registered agent upon whom process against the corporation may be served is: Sandra Seller, 123 Main Street, New City, New Tutor 11111 SEVENTH: The date the corporate...
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...Application Paper #2 Improved Corporate Governance will improve Japan’s Earning Power Luis C. Mendoza Corporate Governance GB-6215(Online) Spring 2015 18 April 2015 Can improved Corporate Governance improve Japan’s earning power? Tradition and honor in Japan’s culture are very strongest traits which develop the foundations of daily lives and how corporations conduct business. A tradition in Japan is taking an all male work team, salesmen and clients to visit a bar/club after hours that are greeted by a “Hostess”. A “Hostess” is a woman who is paid to flirt with men. These visits are sometimes mandatory which corporations cover fully and label them as “entertainment expenses” (Smith, Japan Flirts with Goverance Reform, 2015). One of Japan’s biggest problems is poor corporate governance (Smith, Bloomberg View, 2015). This is an example and evidence that poor corporate governance to a degree is liable for the potential drought of business investments into Japan’s economy (Smith, Japan Flirts with Goverance Reform, 2015). This is an example of why Japan’s Prime Minister Shinzo Abe’s made a decision to develop and incorporate Abenomics in 2014. Japan, as a society with extreme high value to culture and respect, views and approaches corporate governance has been very different for the past few decades compared to the United States. Japan’s board members are typically internal corporate managers rather than independent directors. Independent directors are very uncommon...
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