An Analysis Of Jim's Corporate Tax And Corporate Finance

Submitted By laryan79
Words: 769
Pages: 4
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LeeAnn Ryan
ACCT618-01
April 9, 2014

Give an overview of what is going to be discussed in the memo
As JIM’s corporate tax and financial analyst, it is part of my job to be familiar with all of the laws, rules and regulations that go along with working for a C Corporation. This includes the ins and outs of what is expected as well as any and all advantages and disadvantages of this process. In this memo I will explain all of this as well as the exchange currency risks of a multinational corporation.
Corporate Advantages
1. Multiple owners-this method allows for there to be many owners. For corporations that have hundreds of owners, this method has been shown to be extremely beneficial. The company is allowed to issue as many stocks as they wish. This also gives them an unlimited growth potential because they are able to issue and sell stocks into the company as they wish.
2. Lower tax rate. This advantage applies to the first $75K of income that a company makes in a year. This advantage works very well for smaller companies too as they typically don’t make as much as a larger corporation and therefore can take full advantage of a lower tax rate. There are also cerain business expenses that are tax deductible.
3. Liability protection. This helps to ensure that stockholders and owners are not held responsible for any and all debts that a corporation takes on. It helps the business owners keep their personal assets separate from those of the company.

Corporate Disadvantages
1. Double taxation. C corporations are required to pay taxes on a business level, as well as on any dividends receive by shareholders. This ensures that the maximum amount of taxes is paid to the government every year.
2. High income tax rates. C corporations pay a higher income tax rate on annual income above $75,000.
3. Level of Formality. This requires corporation to have a more formal method of accountability. This means that they are required to have a Board of directors, with meetings and minutes taken to account for what is said and done. They must also have a certain structure in place that includes directors, officers, and shareholders.
4. Registering with the SEC. This is required for all companies that have a minimum of 500 shareholders and at least $10 million in assets. The SEC has additional rules and regulations that all companies must comply with. Some of these rules and regulations can cause the company additional expenses to get to a point where they comply with the SEC rules.
Exchange Currency Risks of A Being A Multinational Corporation
The exchange rate between currencies is an ongoing issue for any corporation that sells or trades overseas. Currency exchange rates can change every day. Some times this can be beneficial for a company and sometimes this can be detrimental for a company. For example, a US based company
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