Running head: Business Law Rachel Lavender Western Governors University 2/21/11 PART A Sole Proprietorship A sole proprietorship is how most business entities begin. This type of business is owned and operated by one person. The main advantage of this type of business is that the owner does not need to get the approval of a partner or board in order to make decisions. A significant disadvantage is that, in a sole proprietorship, there is no separation from the business and personal assets, therefore, there is unlimited personal liability to the owner’s personal assets. · Liability-There is no difference between personal and business assets.
LIT1 Task 1 SOLE PROPRIETORSHIP: As the first word in the name suggests there is no distinction between the owner and the business, legally they are viewed as one entity. When it comes to starting a business this option is a perfect one because there is little to no start-up cost and autonomy since it is now your sole responsibility. The main disadvantage to this type of business is that financially the owner may find it hard to start up because any money that I loaned is a personal loan. • LIABILITY – The owner (proprietor) is liable for all debts and profits the business is and vice versa. The business and the owner are one entity so when the business owes on a debt the owner’s personal assets are liable to be taken as payment
The size of the credit union does not matter, all credit union have a Board members that have the power to approve or denied any policy changes, refund fees to it members and increase or decrease of the interest rates. The board should implement its power wisely within guidelines of the business, while attending to its fiduciary responsibilities. In the past the Board members have used this power for their owned benefits. Two years ago the credit union was offering 2.50 percent on the savings accounts and 3.15 percent on the auto loans. The credit union was not making much of a profit.
Jones purchase the stock of Smithon outright leaving Smithon intact? The stock should not be purchase by Mr. Jones. Mr. Jones acquiring the assets, liabilities and also would inherit the contractual obligations of the selling corporation, would, be the results of the purchase. In lay terms, he has bought the existing Smithon Corporation and he is responsible of ensuring daily operations run efficiently but the tax aspect of acquisition he is responsible for existing and any future tax liabilities that the selling corporation had. It would be my advice for Mr. Jones to not buy the stock because of the liability of current and future tax obligations which Mr. Jones would incur from the purchase of the stock.
[3] http://www.irs.gov/businesses/small/article/0,,id=146335,00.html It is important to determine if the taxpayer martially participates because this classifies the income as active or passive. Passive activity losses are non-deductable from active and portfolio income. This is why it is important to determine if the taxpayer martially participates in the business activity. PROBLEMS: 7-46) The $30,000 loss is considered a passive loss and can only be deducted against passive income, it is therefore suspended and carried forward to future years to offset potential passive income in those years. Mary has no martially participation in the rental activity, therefore the loss is considered
Regular training sessions are hugely important. 5 (i) BUSINESS FORMAT (LEGAL FORM) OF THE BUSINESS My chose of company is “Vega Electronics” - the legal form of this business type is “Sole Trader”- it is the simplest business format and is a business, which is owed and operated by one individual. In the world of Business there is many Business Formats. Some of the main categories are: * Private companies in private sector – these are organizations that are privately owned and not part of the Government – this could be corporations (profit and non- profit ), charities and partnerships * The Public sector – these are organizations, that are usually owned and operated by the government, this could be provincial, federals, state or municipal governments 5 (ii) Advantages of “Sole Trader” Business format are : * Ability to control every aspect of the business – unlimited span of control in terms of the business * Only one layer of taxation- which means the business is not required by law to file a tax return as a business * The owner of the business can chose their own pattern of working hours- which gives more
A sole proprietor however does not necessarily have to run the business him, the owner can have others oversee and run the operations of the business just not as a partner, the owner is the overall decider of what will happen and will dictate the businesses future. This type of business form is the most widely used throughout the country, however it is not a form of business that is necessarily run with a large employee count. Rather it tends to be used with companies of one-person or a small number of employees. Advantages * Simple – start up is basically easy; the only legal item needed at first is state or local permits and licenses. If you want the business to have a name other then your given name you can file a request for that.
Under law the employee is not required to pay any taxes and will have to pay capital gains tax. The second stock options is called a nonqualified stock option (NQSO), which this type of option doesn’t receive any type of special incentives and is the same as a cash compensation. The member is required to pay payroll, income tax, and capital gain tax if the stock is sold. (Kaplan, Warren, 2010). 2.
No special tax rates for capital gains apply to corporations, the entire gain is included in income subject to normal corporate rates. None of these amounts would be reported on her individual return. 36. A. An S-Corp: S-corporations allocate entity income to shareholders, where it is then reported on their individual returns.
Yes, Richie can deduct this loss on his Schedule E given the material participation rules of §469. Internal Revenue Code §469 applies to individuals (including partners and S corporation shareholders), trusts, estates, and personal-service corporations. It defines a passive activity as the conduct of any business in which the taxpayer does not materially participate, which means participating regularly, continuously, and substantially. A taxpayer materially participates in an activity if he or she works on a regular, continuous and substantial basis in operations (IRC § 469(h)(1)). If a taxpayer does not materially participate, losses are passive, which means they generally are not deductible in the absence of passive income.