Limited Liability Companies (LLC) A limited liability company combines the attributes of a partnership with the limits on liability of a corporation. The profits and losses of the company still pass to the owners as in a partnership, but the losses can only offset other income up to the amount the individual invested. Formal action is not required to form a LLC, but articles of organization are filed with the proper state department. Management is still controlled by the owners. C Corporation A C corporation is the basic form of corporation in the United States.
Free cash flow measures a company’s financial health. This is determined by calculating operating cash flow minus capital expenditures. This only represents the cash that a firm is able to make after spending all required monies needed to keep or expand an asset base. Also known as a non-GAPP financial measure. Earnings before interest, tax, depreciation, and amortization or EBITJDA is minus net cash interest expense, non-discretionary cash capital expenditures and cash taxes paid.
All profits and income pass directly through the business owner to the individual. Just as it will be taxed as personal income, all profits are considered personal gain. Profits do not need to be shared with anyone. -Location (Expansion): To move the business into a dif... ... middle of paper ... ...h state may have different laws concerning this matter. -Control: The owner, or person that started the LLC, generally has the control, unless otherwise specified to be jointly managed.
Financial Factors The income statement is a simple and straightforward report on the proposed business's cash-generating ability. It is a score card on the financial performance of your business that reflects when sales are made and when expenses are incurred. It draws information from the various financial models developed earlier such as revenue, expenses, capital (in the form of depreciation), and cost of goods. By combining these elements, the income statement illustrates just how much your company makes or loses during the year by subtracting cost of goods and expenses from revenue to arrive at a net result -- which is either a profit or a loss. For a business plan, the income statement should be generated on a monthly basis during the first year, quarterly for the second, and annually for each year thereafter.
2. Income Taxes The business owner is responsible for paying taxes on all profits generated by the business as personal income and does not need to do a separate corporate tax filing. The proprietor can also reduce his or her taxable income by charging off business expenses. 3. Longevity or continuity of the organization Since finding a source of funding is one of the biggest challenges a sole proprietor may face, it hinders the business to have longevity... ... middle of paper ... ...d. The shareholders, however, will be responsible reporting their share of the profits and paying taxes when filing their personal tax returns.
The owner has the ability to grow or contact its operation at will with no need to consult with a boss or board of directors most sole proprietorships operate on a small scale, the main factor that distinguishes a sole proprietorship is the sole responsibility of ownership and decisions. DISCUSSION OF THE KEY CHARACTERISTICS 1.LIABILITY: There are no limits on liability with a sole proprietorship, the owner is responsible for all the businesses debts and obligations. The earning power of a sole proprietor can be limited due to lack of capital. The sole proprietor is only able to obtain personal credit to expand the company, the bank will not treat the company as its own entity 2.Income taxes:Income earned by the sole proprietorship is income earned by its owner and is taxed as such 3.Longevity: the sole proprietorship has a limited lifespan once the owner dies or moves on from the sole proprietorship will cease to exist 4.Sole proprietors have complete control over the decision making process. 5.The profits of the company do not have to be shared with anyone, the downside is the liability and loss are also not shared with anyone else.
1. Sole Proprietorship This is a one man business. The owner is entitled to all the profits as well as the losses. He is also personally liable for any obligations or debts incurred by the business. A Singaporean PR or individual looking to start a sole proprietorship must first make an application for the business name.
As such, they are taxed together, once, as personal income tax. All profits gained through the sole proprietorship are direct income for the proprietor and are taxed as such. Any business expenses or losses can be deducted from their personal income tota... ... middle of paper ... ...ement decisions of the business. Profit Retention. Profits are dispersed between the general and limited partner as designated by their agreement when they became partners.
i. Liability: Incase of business debts, the owner is liable personally-unlimited liability. The assets of the business owner can be taken to pay off business debts since the two are not distinct (Dlabay, 2011). This is the major limitation of a sole proprietorship. ii.