If the business has debt that is unpaid then the creditors could go after the individual. Same is also said if the owner has debts separate from the business debt the creditors could go after the business. As a sole proprietorship business, liability insurance could be purchased to deter this. • Income Taxes- As a sole proprietorship business, a person can avoid the higher taxes that are associated with corporations. A sole proprietorship business can also deduct business expenses just like any other business.
Consequently, shareholders have no flexibility to alter their legal treatment with respect to one another, with respect to the corporation, and with respect to outsiders” (15-3). However, states provide default provisions for LLC’s and allow members the flexibility to alter arrangements based on their management style and desired outcomes. Corporations also require onerous fees and organizational requirements that must be met. LLC’s have fewer formalities, do not require board meetings and do not impose strict organizational reporting requirements. Tax considerations are also an important part of forming a business and play a significant part when choosing an entity.
The vendor will be function in effort to make a profit as is with all businesses. The problems can come when the vendor needs to increase profit and since the contracts are normally a fixed price, the only way for them to do so is to decrease expenses. This is a viable option as long as they meet the conditions specified in the contract (Bucki, 2012). When outsourcing to another company, your organization is now tied to the financial well-being of the vendor. The problem can arise when after contracting out the IT functions of the organization and paying the fees negotiated, the vendor goes bankrupt leaving the companies who have contracted to them without an IT resource (Bucki,
Introduction Subsidiary Corporations have the opportunity of special tax treatment that if allowed may offer various benefits to the parent corporation or their shareholders. Respecting the subsidiary status of these corporations may hold large tax consequences or benefits. The tax statuses of these subsidiaries do not represent a black and white issue. Taxpayers and the authority of the IRS hold different interests regarding paying taxes. Taxpayers have the incentive to try to pay as little tax as possible in order to maximize their wealth.
In order for a corporation to become incorporated it must follow the general corporation of the state. An advantage of a corporation is that it is its own legal entity and thus does not hold any legal or monetary liability on its shareholders. In a limited liability partnership, the partners are only liable for the amount of monies invested in the organization, however that is not the case with a corporation. In a corporation the share holders bare “NO” liability at all. The downfall of a corporation is that of double taxation.
Only company assets may be claimed if debts are not paid. Taxes are paid based on net income. Individual shareholders are also taxed on dividends. This is a form of double taxation. A corporation can exist for a limited time or as long as there is a board to carry on business on a continuous basis.
Limited Partnerships A limited partnership is made up of at least one general partnership, and one or more limited partnerships. A limited partner, has limited liability, but has no control over management decisions, or no control over the day to day operations of the business. A general partner has unlimited liability, and has the authority over the management of the
If no documents are forged, and if practices are properly approved and disclosed, appropriately accounted for, properly treated for tax purposes and in accordance with the terms of the option plan, most option granting practices should fall safely within the law (Rives, 2006). Legally as long as all of the paper work is met and the taxes are paid this is a perfectly legal process, however ethically it is illegal. A CEO has social responsibilities as well as responsibilities to his or her organization. For a CEO to profit when his or her corporation is in a slump or reporting tragic losses on its balance sheet, this is not a time for a CEO to be cashing in. This demonstrates poor judgment and poor faith in ones company.
Your personal assets are not subject to claims of the corporation’s creditors, only your investments in the corporation are subject to any claims. As for the $25,000 because it is directly related to expense paid upfront by your business and taxation has already occurred not tax liability should be assessed to this amount. For tax purposes
It removes the section of the tax code that is biased against the formation of capital (Meehan). It eliminates the death tax, capital gains tax and double taxation of savings and dividends (Meehan). Families and individuals are not required to report dividends, interest or other business-related income; this income is taxed at the business level (Meehan). The flat tax makes it unnecessary to pay interest, dividends and other business tax at the individual levels (Meehan). A flat tax employs territorial taxation, which is when the government only taxes income that is generated within national borders (Meehan).