Business Case Study

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I. The main types of business entities are the following: Sole Proprietorship, Partnership (General and Limited), Corporation, S Corporation and Limited Liability Company (LLC) (Kubasek, 2012).
a. Sole Proprietorship & Partnerships are easy to create and have less legal formalities. The profits are taxed as your own personal income. The disadvantage is you would be personally liable for the business debts and can be personally sued (Kubasek, 2012).
b. Corporations and S Corp are legal entities and are formed by selling stock to shareholders. Corporation can be sued but the shareholders cannot. This would protect you from being personally liable for the business debts and law suits. Corporations pay taxes on its profits and shareholders pay taxes on the dividends they receive. Formal record keeping is required. S Corporations avoid the double taxation and do not pay taxes on the income, only the stockholders pay on their distribution which is then reported on the shareholder’s personal income taxes (Kubasek, 2012).
c. Limited Liability Company is an unincorporated business that combines the advantages of a partnership and corporation. Similar to a …show more content…

Personal property issues may arise with Sam using his personal vehicle. Since Sam is considered an agent to the business, the principle can be liable for any injury caused while Sam is acting on behalf of the business. Sam must have liability insurance that does not have a business exclusion clause.
VIII. Real property and personal property should be declared in an estate planning. Issues such as divorce whether it be you or your children must be considered as well as your death. How will the property be divided if such situations happen? What about the property the business is using? What would be the best arrangement to reduce taxes so your family keeps the wealth you have built? Clear details of your real property and personal property as well as the business should be outlined in your estate

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