Business Entities
Xavier Shepard
BUS415
8/1/10
Jane Schnider
Business Entities
When opening a business it is important to choose the correct entity that will allow it to be successful. Upon choosing the best entity for the business there are different rules and regulations that have to be followed, from liability to taxation. In this essay I will address the restaurant/bar Miriam, Lou, and Jose plan to open, Akiva and Tara opening a birth clinic, and the construction scenario.
Miriam, Lou, and Jose will be opening a restaurant/bar. They will all be business partners. It would be in their best interest to run as a corporation. The advantage of being a corporation is that it allows its owners to protect their personal assets from creditors. However in this case, a corporation is particularly important for Miriam who is a wealthy investor and is financing the project in return for a percentage of ownership, and she already knows the risk involved when taking this step. Only corporate assets are used to pay business debts, making the business only able to lose the money that was invested into the corporation. The owners of a corporation receive income, and possibly even bonuses like any other employee. They have to pay taxes on their income like anyone else, and report paying the tax on their personal tax return. Taxes will also be paid by the corporation on all the profits left in the business after paying out salaries, overhead, and other expenses. In order to do this they will have to file their own tax return under IRS form 1120. With Miriam, Lou and Jose opening this restaurant/bar it is absolutely necessary they get a liquor license. This is a major issue because if it is not taken care of, it can be the first reason why the business is shut down. Staff will have to be properly trained on serving liquor, and checking ID to make sure the customer is of age to drink. The staff should be trained to refuse bar service to any customer... [continues]
Xavier Shepard
BUS415
8/1/10
Jane Schnider
Business Entities
When opening a business it is important to choose the correct entity that will allow it to be successful. Upon choosing the best entity for the business there are different rules and regulations that have to be followed, from liability to taxation. In this essay I will address the restaurant/bar Miriam, Lou, and Jose plan to open, Akiva and Tara opening a birth clinic, and the construction scenario.
Miriam, Lou, and Jose will be opening a restaurant/bar. They will all be business partners. It would be in their best interest to run as a corporation. The advantage of being a corporation is that it allows its owners to protect their personal assets from creditors. However in this case, a corporation is particularly important for Miriam who is a wealthy investor and is financing the project in return for a percentage of ownership, and she already knows the risk involved when taking this step. Only corporate assets are used to pay business debts, making the business only able to lose the money that was invested into the corporation. The owners of a corporation receive income, and possibly even bonuses like any other employee. They have to pay taxes on their income like anyone else, and report paying the tax on their personal tax return. Taxes will also be paid by the corporation on all the profits left in the business after paying out salaries, overhead, and other expenses. In order to do this they will have to file their own tax return under IRS form 1120. With Miriam, Lou and Jose opening this restaurant/bar it is absolutely necessary they get a liquor license. This is a major issue because if it is not taken care of, it can be the first reason why the business is shut down. Staff will have to be properly trained on serving liquor, and checking ID to make sure the customer is of age to drink. The staff should be trained to refuse bar service to any customer... [continues]
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