Task 1: Legal Issues For Business Organizations
Legal Issues for Business Organizations – LIT1
Task 1
Legal Issues for Business Organizations – LIT1
Task 1 – Part A
The way a business is organized is an important part of the business’s structure. “Different organizations provide different advantages and disadvantages in creation cost and simplicity, ongoing maintenance requirements, dissolution and continuity, fundraising, managerial control, public ownership, tax planning, and limited liability.” The nature of the business being conducted has little to do with the way the business is organized. (Johnson, 2013)
Sole Proprietorship: The basic concept of sole proprietorship is that there is no distinction between the individual business owner and the business. To start this …show more content…
As a general partner in a business, each partner shares joint and individual liability. “Partners are not only liable for their own actions, but also for the business debts and decisions made by other partners. In addition, the personal assets of all partners can be used to satisfy the partnership’s debt.” (Choose Your Business Structure, n.d.)
Income Taxes. Most general partnerships must register their business with the IRS as well as state and local agencies and obtain a tax ID number. Partnership taxes normally include annual return of income, employment taxes, and excise taxes. The individual partners are responsible for additional taxes such as income tax, self-employment tax, and estimated tax. (Choose Your Business Structure, n.d.)
Longevity or Continuity of the Organization. General partnerships may change ownership over time. However, any change in ownership should be outlined in a partnership agreement. The agreement typically outlines how new partners will be brought into the business, how current partners can be bought out of the business, and how the partnership can be dissolved.
Control. The general partners have complete autonomy to make all decisions regarding the business. This can be an advantage in the day-to-day operations of the business as how decisions are made are typically outlined in the partnership …show more content…
In a C-Corporation, the business is its own legal entity and assumes the liability for all debts and the individual shareholder’s assets are protected. This type of organization would protect you from your employee accident concerns as well as protect your personal assets from loss or debt incurred by the business.
Income Taxes. C-Corporations must register their business with the IRS as well as state and local agencies and obtain a tax ID number. Since the corporation is a separate legal entity, the corporation must file and pay taxes. Obtaining the advice of a tax professional can help you in setting up this part of your new corporation.
Longevity or Continuity of the Organization. C-Corporations continue regardless of how ownership and shareholder changes over time. This will alleviate your concern about the future of the company as the founding owners pass over time.
Control. In C-Corporations, the shareholders maintain control. Shareholders normally hold roles as officer, director, and employee. If your goal is to remain in control, then placing your family members into officer roles is
Task 1
Legal Issues for Business Organizations – LIT1
Task 1 – Part A
The way a business is organized is an important part of the business’s structure. “Different organizations provide different advantages and disadvantages in creation cost and simplicity, ongoing maintenance requirements, dissolution and continuity, fundraising, managerial control, public ownership, tax planning, and limited liability.” The nature of the business being conducted has little to do with the way the business is organized. (Johnson, 2013)
Sole Proprietorship: The basic concept of sole proprietorship is that there is no distinction between the individual business owner and the business. To start this …show more content…
As a general partner in a business, each partner shares joint and individual liability. “Partners are not only liable for their own actions, but also for the business debts and decisions made by other partners. In addition, the personal assets of all partners can be used to satisfy the partnership’s debt.” (Choose Your Business Structure, n.d.)
Income Taxes. Most general partnerships must register their business with the IRS as well as state and local agencies and obtain a tax ID number. Partnership taxes normally include annual return of income, employment taxes, and excise taxes. The individual partners are responsible for additional taxes such as income tax, self-employment tax, and estimated tax. (Choose Your Business Structure, n.d.)
Longevity or Continuity of the Organization. General partnerships may change ownership over time. However, any change in ownership should be outlined in a partnership agreement. The agreement typically outlines how new partners will be brought into the business, how current partners can be bought out of the business, and how the partnership can be dissolved.
Control. The general partners have complete autonomy to make all decisions regarding the business. This can be an advantage in the day-to-day operations of the business as how decisions are made are typically outlined in the partnership …show more content…
In a C-Corporation, the business is its own legal entity and assumes the liability for all debts and the individual shareholder’s assets are protected. This type of organization would protect you from your employee accident concerns as well as protect your personal assets from loss or debt incurred by the business.
Income Taxes. C-Corporations must register their business with the IRS as well as state and local agencies and obtain a tax ID number. Since the corporation is a separate legal entity, the corporation must file and pay taxes. Obtaining the advice of a tax professional can help you in setting up this part of your new corporation.
Longevity or Continuity of the Organization. C-Corporations continue regardless of how ownership and shareholder changes over time. This will alleviate your concern about the future of the company as the founding owners pass over time.
Control. In C-Corporations, the shareholders maintain control. Shareholders normally hold roles as officer, director, and employee. If your goal is to remain in control, then placing your family members into officer roles is