...considered when choosing a business entity: liability, taxation and record-keeping (Entrepreneur.com). Liability Bill and Darlene need to determine to what extent they need to be insulated from legal liability. This can depend on the kind of business they’re planning to start. A business that has a large amount of fixed assets that require hefty investments may mean the potential first year losses will be higher than expected so it would be better to limit their personal liability for the business losses. A Limited Liability Partnership (LLP), a Limited Liability Company (LLC), or a corporation can allow them to insulate their assets in the case they are found legally liable for damages. An LLC allows any entity to be owners but they offer more flexibility than a corporation. This is important if Bill and Darlene decide to grow their business and add more members since there are no limits for an LLC yet they still retain the tax advantages of a partnership with pass-through...
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...Title: Fiduciary obligations may spring up by reason of relationships of trust and confidence or confidential relations. Introduction Fiduciary is an important issue arises in business relationships, in partnerships, it helps create a fair business environment for all the parties when working together, in agency, it protects the principles' benefits, in corporations, it may lead the business operates properly and legally. Therefore, fiduciary obligations are closely related to co-operations Trust and confidence are the most important elements in these fiduciary relations, in this essay, the relationship of a fiduciary obligation and above relations will be demonstrated and explained. Table of Content Introduction P.1 Table of Content P.2 The Basic Concept of Fiduciary P.3 Fiduciary Concepts and Obligation vs Partnership Relations P.6 Fiduciary Concepts and Obligation vs Corporate Relations 1. Directors P.8 2. Promoters P.11 Conclusions P.13 Bibliography P.14 The Basic Concept of Fiduciary Fiduciary, under oxford’s dictionaries’ definition, is trustee who is given control or powers of administration of property in trust with a legal obligation to administer the beneficiary’s interest, and the Cambridge dictionary defines “relating to the responsibility to look after someone else's money in a correct way”. It is obvious that the fiduciary concept involves the element of mutual...
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...money flows in and out of the business, how the business and owners are taxed, and the levels of risk to owners. There are several types of business forms. These types are sole proprietorship, partnership, Limited Liability Partnership (LLP), Limited Liability Company (LLC), S Corporation, franchise, and corporation. The businessperson needs to have an understanding of which business form is justified for their business startup. The beginning businessperson looks at the sole proprietorship a majority of times because of its simplicity (Anthony, 2011). A sole proprietorship is the simplest form of business organization. The owner of the business, the sole proprietor, is the business. There is no separate legal entity. Sole proprietorships are the most common form of business organization in the United States (Cheeseman, 2010). One example of a business that becomes a sole proprietorship is an independent contractor. The future business owner completes work for a business, but they are not an employee of these companies, they are considered self-employed and therefore a sole proprietor. Most person call this “moonlighting.” For example, if an electrical contractor with a full-time job also does home electrical installation after work or on the weekends and is not representing the company for which they work for during regular hours, the home side-work is moonlighting. Many hobbyists can also become sole proprietors if their hobby becomes popular and providing orders to customers...
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...economics, accounting and finance Understand why financial information is important List the main users of accounting information and understand their information needs Distinguish between management accounting and financial accounting List the main types of business ownership and outline their characteristics Summarize the advantages and disadvantages of each type of business ownership p 2 Panagiotis Dontis Charitos WBS, 2013-14 IN TODAY’S LECTURE... Topics Differences between economics, accounting and finance Importance of financial information Users of accounting information and their information needs Differences between management accounting and financial accounting i Main types of business ownership Characteristics Advantages vs. disadvantages 3 Panagiotis Dontis Charitos WBS, 2013-14 ECONOMICS - FINANCE – ACCOUNTING Economics is a social science Study the production, consumption and distribution of services or goods Explain how economies work and how do different economies interact Finance is a subset/tool of economics that studies the financial markets Personal finance, corporate finance, state finance Accounting is an essential part of finance and economics Precise recording, reporting and assessment of financial deals and transactions of a business Preparation of statements or declarations concerning assets, liabilities, and outcomes of operations of a business 4 Panagiotis Dontis Charitos WBS, 2013-14 ECONOMICS - FINANCE – ACCOUNTING ...
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...Chapter Six Business Formation: Choosing the Form that Fits Review Questions 1. Describe the basic features that distinguish the four basic forms of business ownership: sole proprietorships, general partnerships, C corporations, and limited liability companies. 2. Why do many entrepreneurs initially set up their businesses as sole proprietorships? Why do many successful entrepreneurs eventually decide to convert their sole proprietorship to some other form of ownership such as a corporation or LLC? 3. How do limited partnerships and limited liability partnerships differ from general partnerships and from each other? 4. What advantages help explain why virtually all large companies are organized as C corporations? 5. What steps are involved in forming a C corporation? 6. Describe the relationship between a corporation’s common stockholders, its board of directors, and its chief executive officer (CEO). 7. How does a merger differ from an acquisition? What is the difference between a horizontal merger or acquisition and a vertical merger or acquisition? Give a real world example of recent merger to illustrate each type of combination. 8. Compare an S corporation with a limited liability company. Why do you think limited liability companies are currently more popular than S corporations? 9. What are the main advantages and disadvantages of a business format franchise arrangements for the franchisee? For the franchisor? 10. What is a Franchise Disclosure...
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...Limited Liability Corporation and Partnership Paper University of Phoenix FIN/419 November 26, 2012 Every business has a basic idea of the entity in which to establish. Capitalization and protection is the main focus to establish the business with a question of which type of entity should a business use to move forward. Businesses have a host of factors when making this decision, the most common forms of these entities are, partnership, corporation, sole proprietorship, and S corporation. A Limited Liability Company (LLC) is a business structure allowed by the different state statutes. The following will list two of these entities and the business entity which I would choose. Limited Liability Corporation Limited Liability Corporation has a unique quality of being structured like a regular corporation, and having the attributes of a partnership. In a Limited liability corporation the owners are protected from personal liabilities, which are similar to a corporation, but have the tax advantages of the partnership. This means the creditors of the business may not pursue any of the personal assets of members of the LLC to recover any business debts. Also if a member of the LLC has any personal debt, the creditors may not attempt to recover from the corporation. LLC owners, called "members," can manage their businesses or hire professional managers. In addition, LLCs enjoy a lot of flexibility. For instance, they can have as many members...
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...align with the needs of the organizers. The most common methods of business operations are as sole proprietorships, partnerships, limited liability companies and corporations. As such, after careful review and revision of the different business organizations, I have decided that I would establish a Limited Liability Company (LLC). A Limited Liability Company, quite simply is a company whose liability is limited. That’s the short version. The longer version is that a limited company is a type of company which when set-up allows an entrepreneur to keep their own assets and finances separate from the business itself. This means that people who have invested in the business (the shareholders) are only responsible for any company debts up-to the amount that they have invested and no more. It is therefore a good way for a business to get investment and run without risk to a personal wealth. Essentially a Limited Company is seen as an entity in its own right, which can be subject to legal action. As a separate body, a limited company can even be the director of another company. The Company Types * Public Limited Companies – also known as PLC’s, Public Limited Companies are businesses which have been established with at least two (2) shareholders with at least £50,000 worth of shares issued. * Private Limited Companies – are similar to public companies but can be run with just one member and cannot...
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...CHARLOTTE BOBCATS/HORNETS Sponsorship Packet for Verizon Wireless Table of Contents Executive Summary 3 Charlotte Bobcats Profile 4 A. Team History 4 Mission Statement and Objectives 5 A. Core Values 5 Charlotte Bobcats Event & Program Description 6 A. Venue Information 6 B. Arena Staff Contact Information 7 2013-2014 Charlotte Bobcats Schedule 8 Corporate Partnership Department12 Inventory of Assets & Benefits13 Capabilities & Past Experience Producing Events14 Compatibility with Sponsor's Image & Target Market15 Sponsorship16 Addendum17 Executive Summary of Sponsorship Proposal The Charlotte Bobcats are a professional basketball team based in Charlotte, NC. The team is a member of the Southeast Division of the Eastern Conference of the National Basketball Association (NBA). Our organization was established in 2004, two years after the previous NBA franchise, the Charlotte Hornets, relocated to New Orleans. The Charlotte area and the Carolinas in general have long been associated with the thrill and excitement of basketball. During the days of the American Basketball Association (ABA), the Carolina Cougars were a region team who enjoyed enthusiastic support. From their inception in 1988 until the relocation in 2002, the Charlotte Hornets were one of the most exciting and well supported teams in...
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...Q. What is a general offer? How is a contract created through general offer? Refer to leading cases. An offer may be made to the world at large. Such an offer is a general offer. However, a contract is not done with the whole world but only with the person who comes forward and accepts the offer. The acceptance might be express or implied. As per Anson, "An offer need not be made to an asertained person, but no contract can arise until it is accepted by an ascertained person". Case of Carllil vs Cabolic Smoke Ball Company. Creation of the contract - If the person performs the conditions of the offer. Thus, a person who finds a lost dog fulfills the condition of the prize money and thus a contract with the owner of the dog is created. General Offer of Continuing Nature - Some offers such as finding a lost object close when it is accepted by the first person. However, some offers, such as in the Carllil case, it can be accepted by any number of persons until the closing date of offer or until it is retracted. Q. Describe the law relating to communication of proposals, their acceptance and their revocation. Section 2(a) of Indian Contract Act 1972 says that when a person signifies his willingness to do or to abstain from doing something to another, with a view to obtaining the assent of that another, he is said to make a proposal. Further, section 2(b) says that when the person to whom the proposal is made signifies his assent, the proposal is said to be accepted. The important...
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...Partnerships vs. Corporations Tracy Kamke Professor Edward Hastings ACC317 March 9, 2014 A partnership is an association owned by two or more people to carry a business or trade with each parnter contributing money, property, labor, or skill and all partners expecting to share the profits and losses. A corporation is a separate entity that has its own rights, privileges, and liabilities separate from its members. Whether you choose to be a partnership or corporation, depends on how much your federal income tax will be. There are different types of corporations and many different partnership types. There are two different types of corporations. You have the C Corporation, which has the toughest tax bracket; you are subject to double taxation. The first tax is on the company's net earnings, and the second tax is that each shareholder must pay tax on his or her dividend. A C Corporation can reduce or eliminate its federal income tax liability by distributing its income to the shareholders who perform services for the company (Battersby, 2008, p.10). The other is the S Corporation which resembles the partnership and report entities like partnerships. Partnerships are not taxable entities and are not subjected to federal income tax. In a partnership, you are required to file a Form 1065 to report the results of the partnership's business activities. There is a general partnership which is two or more partners that participate in management of...
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...business: sole proprietorship, limited liability partnership, Limited Liability Company, S corporation, franchise and corporate form. This paper will also discuss the justification as to why this business form is preferred. Sole Proprietorship. Suzie owns a shop that does body wraps that helps individuals have slimmer waists and thighs. People are wrapped like mummies and the elastic wraps are saturated in a mineral solution to help assist in breaking down fat. She owns a small shop in a strip mall downtown. A Sole Proprietorship is a business that is owned by one person, and is commonly known as a small business. It is preferred by individuals who want to start their own business because they can make all the decisions regarding payroll, hiring and firing of employees ("Doing Business as a Sole Proprietor,") Business owners of this type file their own taxes. The owner can also sell the business without the approval from others, since they own the business outright. Personal liability is also a factor when opening a business as a sole proprietor. If for example, a customer gets burned by the wraps that are used and the customer sues Suzie, she will have to hire her own attorney utilizing her own funds. This can become very costly and personal assets may be at risk. She will also have to look into obtaining liability insurance for issues such as injury, burglary and the like (Cheeseman, 2010, Part VIII). Partnership. Chris and Jeremy decide to open a Barber shop...
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...or through a partnership in order to meet the needs of their customers. They also have to consider in their decision the issues with their current staff lacking some of the skill needed to produce this new product. Describe the Situation Issue and Opportunity Identification TeraTech is faced with the dilemma of which direction the company should move forward. With customer satisfaction becoming an issue and increased competition TT needs to move fast on deciding to launch a new product created in-house or to partner with a company already producing such a product. TT is being challenged by this due to company growth has begun to slow down. Christine DeFalco has addressed the issue of a marketing mix and whether production in-house or thru a partnership as to how this product be priced, promoted and placed to fit within the direction TeraTech is wanting to move forward. Stakeholder Perspectives/Ethical Dilemmas If going with the direction of TeraTech expanding its product line there are ethical dilemmas that stakeholders are being challenged. One dilemma is Christine DeFalco hopes of expanding TT product line may become a challenge with Chris Riggs, VP of human resource announcing a hiring freeze. Marketing research to collect and analyze information to justify what actions to take can be a strong argument to convince Chris to support hiring additional staff to meet the demands producing a new product. The alternative option of TT is a partnership with industries...
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...Limited Liability Corporation and Partnership Jacob Sanchez FIN-419 December 22, 2014 Michele Huss Limited Liability Corporation and Partnership Introduction Many people attempt to start businesses annually and need a little guidance on what their best choices are for forming the blueprint of their future endeavors. Limited Liability Corporations and Partnerships are a couple choices that can be chosen by some entrepreneurs. They have some things in common, and also have distinct differences. This paper will discuss how each type of business entity is formed, the tax benefits, some advantages and disadvantages. Lastly, these things will be evaluated to determine under what circumstances one should be chosen over the other. Limited Liability Corporation A Limited Liability Corporation, from now on an LLC, is a less complex formation of a corporation. It is formed by filling an articles of organization with the states Secretary of State office. This article will include the business name, the members, and in some states an operating agreement. (U.S. Small Business Administration, n.d.) In an LLC with more than one member an operating agreement is ideal, for structure and regulation. In most instances it will provide a roadmap of rights, arrangements, and profit sharing and loss. (U.S. Small Business Administration, n.d.) Taxation is an important aspect of forming a business, an LLC has many choices for taxation. An LLC can opt to file as a corporation, in which...
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...Partnerships vs. LLC An LLC is a better way to operate a business than a partnership. While LLCs and Partnerships do share some similar advantages and disadvantages, the LLCs ability to protect its members make it the superior business model. Limited Liability Companies are a hybrid. They share some of the same advantages of both the corporation and partnership (Reed,445). Corporations exist mainly to shield shareholders and owners from the liabilities of the company. The profits of the corporation are taxed both at the corporate level and on dividends. Limited liability companies are treated as nontaxable entities, much like partnerships. Partnerships are like the opposite of a corporation. At least one person must be responsible for company debts and litigation, but profits go directly to owners avoiding the "double taxation." Limited liability corporations offer limited liability protection to owners and members, and profits go directly to the members. Because an LLC is essentially the ideal business structure, many new businesses form as one. In an LLC owners are not personally responsible for company debts. This is the most important attribute of an LLC. In a partnership, the owners are personally responsible for business debts. If the assets of the partnership cannot satisfy the debt, creditors can go after each owner's personal bank account, house, etc., to make up the difference. By contrast, if an LLC runs out of funds, the owners are usually not liable. In 1988...
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...Assignment 1: Partnership vs. Corporation Due Week 7 and worth 240 points Use the partnership and corporate tax returns for the practice sets titled, “Pet Kingdom” and “ROCK the Ages, LLC” that you prepared in Weeks 3 and 5 in order to complete this assignment. Write a four to five (4-5) page paper in which you: 1. Compare and contrast the tax rules and treatment applicable to corporations and partnerships. Indicate the major way in which the tax treatment affects the shareholders or partners. The tax rules for a corporation are taxed at a different level than the various business structures. Corporations are the only business structure that are required to pay its own income taxes based on the profits received. The corporation requires it to file a tax return using Form 1120 and pay taxes at a corporate income tax rate on any profits. When deciding on what amount must be paid at a corporate level, the amount of tax due must be estimated and are due by the end of the year and quarterly payments are recommended. The shareholders are affected by the corporation tax rules, because they are taxed based upon being owners and working for the corporation and required to pay taxes on their salaries and the bonuses they receive like any regular employees of a company. It must be understood that salaries and bonuses are being deducted as business expenses, so that means that the corporation does not pay taxes on them. A corporation is taxed on all its profits because it does not...
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