Business Entity And Tax Essay

Submitted By jbennet4
Words: 513
Pages: 3
Open Document
The following is a discussion on the different characteristics of business entities.

Limited Liability Companies: A LLC can be handled as a disregarded entity, a corporation, or partnership. Members of an LLC are mostly treated separate from the owner. They will follow sole proprietorships rules if member is an individual and activity is trade or business, not rental. LLC members may be subject to “S” corporation tax if they meet the requirements. If it does not make the requirements for the above, then multi-member LLC will follow partnership rules for tax purposes.
Sole Proprietorship: The formation of a sole proprietorship is easy and non-taxable. As owner of a sole proprietorship, it is appropriate to report all business income or losses on the personal income tax return; the business alone is not taxed separately. If the owner employs a child under 18 or a spouse, they may deduct the wages paid. The owner is held responsible for any obligations coming from the company with no liability protection. If the owner contributes to the retirement plan, it is not a business deduction and likewise, will be include in self-employment tax. The owner can’t deduct their own fringe benefits as a business expense, only their employee’s. If the owner’s business was not willed to another, the business will no longer exist upon death. Partnerships: Partnerships, unlike sole proprietorships, are entities separate from their owners but there is still one level of tax imposed. If property is contributed or distributed, there is usually no gain recognized and it is usually tax-free. There is flexibility with partners added but because of this, the IRC rules for partnerships are very complex. A partner may be subject to self-employment taxes prior to putting money aside for a retirement plan. A business may find partnership entities useful if they plan to add partners in the future.
Corporations:
Corporations are created under state law. A corporation may either be a “C” corporation or an “S” corporation.
“C”
Show More

Related Documents: Business Entity And Tax Essay

Essay about Starting a Business

It is vitally important to start — and keep — a business on solid legal footing, so make finding qualified legal and accounting professional help a top priority. Since legal requirements are subject to change, you should contact the appropriate local, state and federal departments for the latest information. → What Type of Business Is Best for You As you begin planning, first determine the legal form of business that is best for your situation- The Forms are: Sole Proprietorship Partnership Corporation…

Words 5753 - Pages 24

An S Corporation Essay

of S Corporation under tax purposes. Multiple sources have been used to determine the advantages and disadvantages. All the sources have the same information, with some being more in depth than other sources. The research does not seem to vary much. Multiple business sources online were used to determine the information in this paper, as well as a government site. Keywords: S Corporation, advantages, disadvantages There are different types of business entities available when forming a…

Words 1297 - Pages 6

John Owner Business Structure Options Essay

John Owner Business Structure Options Robin Duuring FIN/571 August 4, 2014 Zhenhu Jin John Owner Business Structure Options Dear Mr. Owner, Having a strong business plan is a good start to starting your business. The various structures, advantages, disadvantages, and tax liabilities are important to know before you make that decision. The opportunities are a sole proprietorship, partnership, corporation, S corporation, and limited liability company (LLC). Sole proprietorship is the more common…

Words 957 - Pages 4

Essay about Buisness: Corporation and Separate Legal Entity

Business A business, also known as an enterprise or a firm, is an organization involved in the trade of goods, services, or both to consumers.[1] Businesses are prevalent in capitalist economies, where most of them are privately owned and provide goods and services to customers in exchange for other goods, services, or money. Businesses may also be not-for-profit or state-owned. A business owned by multiple individuals may be referred to as a company. The etymology of "business" stems from the…

Words 1008 - Pages 5

Essay on Limited Liability

environment. Each form of business has its own strengths and weaknesses that can be beneficial and detrimental in different settings. Limited Liabilities can be characterized by different tax incentives, ownership, and liabilities. LLC’s are quickly becoming the popular choice of many small businesses in the Unite States. LLCs combine the most favorable attributes of general partnerships, limited partnerships, and corporations. (XXX) LLCs have the benefits of being taxed on entity level. This means the…

Words 806 - Pages 4

Business Structure Week 2 Essay

Week 2 - Business Structure Reading (Chapter 3 – Business Structure) Sole Trader: individual who controls and managers a business. The business is not a separate legal entity but the owner is fully liable for all debts and if the business incur debts the sole trader’s personal property will be sought. General registration requirements involve applying for an ABN. Advantages and Disadvantages of Sole Traders: Quick and easy process Inexpensive Not subject to company regulations such as the corporations…

Words 979 - Pages 4

Entrepreneurs: Corporation and Business Essay

incorporate their business in the state where they conduct their business. If you live and work in New Hampshire, for example, you would incorporate your business in New Hampshire. If your business conducts business throughout the United States, you need to incorporate in the state where your headquarters will be. If you have a substantial business presence in another state, you may need to let that state know and file state tax returns or sales tax returns based on your business earnings in that…

Words 736 - Pages 3

Essay on Practice Questions

Management[edit] Main article: Management The efficient and effective operation of a business, and study of this subject, is called management. The major branches of management are financial management, marketing management, human resource management, strategic management, production management, operations management, service management and information technology management.[citation needed] Owners may administer their businesses themselves, or employ managers to do this for them. Whether they…

Words 1770 - Pages 8

Essay about International Tax

Income Tax Acts to the transactions in question is determined by the way the parties, involved in each transaction, relate to each other and their tax jurisdiction. Metro Industries is the head entity and as a foreign resident for tax purposes (the issue of residency status cannot be raised from the information provided), subject to the Australian income tax as determined under s6-10(5). Metro-Traffic is a subsidiary of Metro Industries which makes it a related but separate legal entity, resident…

Words 2630 - Pages 11

Business Organization Form Choice Memo Essay

Business Organization Form Choice Memorandum Erin P PLAW 350 December 9, 2013 Memorandum To: Professor From: Erin P. Date: October 23, 2013 Re: Business entity form and federal tax regime choice of Erin P Photography ------------------------------------------------- As per our conversation on November 29, 2013, in regards to the firm’s new client, Erin P Photography, I have compiled the following information of your review. In this memorandum you will find that I have thoroughly…

Words 3192 - Pages 13