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
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.
Income is paid to shareholders as wages then that is also taxed on the shareholder 's personal income tax return.
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.
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 ...
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
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
Perpetual Existence: An LLC has a separate legal existence from its owners. They may die or sell their shares, but the LLC’s continues to exist. It stops existing after the management has successfully concluded the striking off process to dissolve it.
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
Limited partners are regarded as passive investors and their shares may be subject to security regulations
...ted Partnership can be defined as a different form of general partnership requiring a partnership agreement among all parties involved. This agreement may include things such as information about business, what products or services will be done in the establishment. There must be at least one general partner among the group to do a limited partnership. This individual will be the team leader and manage operations as well as being responsible for making decisions for the business. All those who are limited partners are lacks authority in decision making or managing operations. However, they are not fully responsible for any debts or other financial problems in the business. Personally, limited partners can be viewed as an investor more than anything else. In fact the only aspect they are at risk to lose is there investment in the business if anything were to go wrong.
Partnership is a business owned by 2 people to 20 people, when starting a partner...
One of the major advantages of a partnership is the tax treatment it enjoys. A partnership doesn't pay tax on its income but "passes through" any profits or losses to the individual partners. At tax time, the partnership must file a tax return (Form 1065) that reports its income and loss to the IRS. In addition, each partner reports his or her share of income and loss on Schedule K-1 of Form 1065.
Joint ventures are not a separate legal entity, although parties can create a company vehicle to manage the joint venture.
Many businesses are formed as partnerships. There are actually several different types of partnerships, including limited liability partnerships.
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.