LIT1 Task One John Main WGU Sole Proprietorship: Liability – There is no legal difference between your business and yourself. You are responsible for all debts and obligations of your business. Income Taxes – Your business income is not taxed separately. It is considered your personal income and taxed accordingly. Longevity – The events that can cause the dissolution of a sole proprietorship: the owner's decision, death or disability of the owner and bankruptcy (Thomas, 2014). Control – You have complete control over your business. Profit Retention – You get to keep 100% of your business profits. Location – You can move your business to another state fairly easy. You will need to register your new business using the “Doing …show more content…
Also a partner can dissolve the business even if the other partners disagree. Control – The control is divided amongst the partners. Profit Retention – The profits are split evenly amongst the partners unless there is a partnership agreement that stipulates percentages. Location – Relocation for a general partnership is the same as for a Sole Proprietorship. Limited Partnership: Liability – The general partners are all responsible for the debts and obligations of the business, but the limited partners are only liable up to their invested amount. Income Taxes – Limited partners receive their income as distributions. The distribution can be taxed as ordinary income or as a capital gains or as a percentage of the two. Longevity – All the general partners and a majority of the limited partners must agree to dissolve. Control – The control is divided amongst the general partners. Profit Retention – The general partners receive their profit as income, but the limited partners receive their income as distributions and it is considered passive income. Location – Relocation for a general partnership is the same as for a Sole …show more content…
They elect a board of directors who oversee business decisions. Profit Retention – The business retains the profits. Location – The business can dissolve in their old state and form a new business in the new state. The business can also reorganize by forming a new business in the new state and merging the old business into it. S - Corporation: Liability – The business has limited liability. The owners and shareholders are generally protected from most lawsuits. Income Taxes – The business is not taxed. The taxes are paid by the shareholders. Longevity – The business is owned by its owners and by its shareholders. If an owner or shareholder changes or dies the business continues on. Control – The shareholders have control of the company. They elect a board of directors who oversee business decisions. Profit Retention – Profits are passed through to the shareholders as income. Location – The business can dissolve in their old state and form a new business in the new state. The business can also reorganize by forming a new business in the new state and merging the old business into
According to the Regs. §1.708-1(b)(4), if the partnership occurs such a Technical Termination, “The partnership contributes all of its assets and liabilities to a new partnership in exchange for an interest in the new partnership; and, immediately thereafter, the terminated partnership distributes interests in the new partnership to the purchasing partner and the other remaining partners in proportion to their respective interests in the terminated partnership in liquidation of the terminated partnership, either for the continuation of the business by the new partnership or for its dissolution and winding up.” Thus, it becomes a deemed new partnership.
Income is paid to shareholders as wages then that is also taxed on the shareholder 's personal income tax return.
A general partnership is when two or more persons decide to share the responsibility of operating a business together. The partners are also equally responsible for all the company debts incurred by each partner. The combined partners in the business allow the business to grow very easy because it is very easy to find sources for funding and investors. The biggest disadvantage that a general partnership has is the difficulty of transferring ownership or selling out because of having the consent of the other partners. An example of a local general partnership is Rest My Friend Lawn Care. The lawn care business originated as a sole proprietor but now it is a family business with several partners. Blake, Larry, and Tracy chose this type of business because they were able to invest in the business and to this day they are making a great profit out of the business.
If your business will be owned and operated by several individuals, you'll want to take a look at structuring your business as a partnership. Partnerships come in two varieties: general partnerships and limited partnerships. In a general partnership, the partners manage the company and assume responsibility for the partnership's debts and other obligations. A limited partnership has both general and limited partners. The general partners own and operate the business and assume liability for the
General partnership. A general partnership is utilized when two or more people want to start a business. In most respects, the business is divided equally between the owners which includes, profits, debts and management of the business and any losses to the business are to be deducted from personal taxes. Mann & Roberts (1979) comments although not required, development of written agreements concerning the division of the business and how it will be managed removes doubt and ensures everyone is traveling in the same direction (p. 47). The disadvantage of this form is everyone is unlimited in the liability of the business. It does not matter if the others disagree with an issue and one party enters into an agreement of debt, all are now
A partnership is a relationship between two or more persons joining together as co-owners to run a business with the aim of making a profit. There are two forms of partnerships: general partnership in which every partner is fully liable for the liabilities incurred by the entity; and limited partnership wherein, at least, one partner has a limited liability, confined to the individual’s capital contribution to the
A partnership is an association of two or more people who typically know and trust each other and therefore come together to set up and carry on a business. The partners have an equal control over the company’s affairs and typically contribute an equal capital amount. Incomes and losses are also equally shared . A trust is an obligation given to an appointed person, the trustee, to hold the assets and property of the business on behalf of the others who are termed as beneficiaries. The trustee could be a company, sole trader, partnership of individual and has the discretion over running and managing the trust including matters such as investments, debt, and income generation. The beneficiaries are all those who receive the income or incur expenses. A limited liability company is a complex business structure whereby it is a separate legal identity, separate from the partners. The company is owned by the shareholders and managed by the directors.
Tax Benefits: For the first three years, the initial chargeable income of up to S$100,000 of a startup company setup in Singapore (LLC) is tax-free. Next, S$200,000, is taxed at the rate of 8.5% of corporate income tax. The tax rate applicable to the income above S$300,000 is 17%.
When two or more persons form a partnership to jointly operate as owners of the business, not only they would share in both profits and loss but also a mutual obligation to each partner. An obligation entails a corresponding right and duty deriving from a legal bond or tie between the obliged and the obligee; and this relationship is interdependent. Partnership in English Law works by way of a matrix of reciprocal agency agreements between each partner and his co-partners generally creating similar obligations. Although the fact of partnership entails the existence
The general partner is unsure of the business structure and is considering other options e.g. Sole proprietorship or Limited Liability
Partnerships may also be risky. The actions of one partner could affect the stability of the partnership. The best means of a partnership is to have a written agreement of the obligations each partner has to fulfill to keep the company up and to determine what shares each partner owns within the company. One other down fall in a partnership is that any lawsuits or debts against the company will fall to the partner themselves; therefore, each partner is financially responsible for his or her share of the business debt (All Business, 2012). Partnerships also are restrained to how much money could be raised and how much the attract investors. When establishing a business a partnership may not be the best way to go. A more beneficial business structure may be to either have a sole proprietorship if no partner is needed or if partnership is needed ...
Compare and contrast two different business forms (sole proprietorship, general partnership, limited partnership, and limited liability forms (partnership or company). What makes the two different? Which situations would each chosen form be more appropriate in?
A general partnership is a business made up by two or more people who agree to conduct business for profit. Each partner shares the profits and losses while contributing their labor and skills to the business. “General partners have a fiduciary duty of loyalty and trust to the other partners and must subordinate their personal interests to those of the partnership.” (Utah.gov) In order to create a general partnership there must be an agreement, but there are no formalities necessary. If partners conduct business under an assumed name, they have to file the business name with the Utah Division of Corporations and Commercial Code. Although there are no formal requirements with regards to the agreement, the partners should take action in creating a formal written agreement to protect their interests in the event of a dispute.
Partnership is a business owned by 2 people to 20 people, when starting a partner...
Joint ventures are not a separate legal entity, although parties can create a company vehicle to manage the joint venture.