Various Forms of Organizations
YOU DECIDE PAPER 2
Part I: Discuss the various forms of organization that are available to Penelope, Mark and John
The various forms of organization available to Penelope, Mark and John are:
GENERAL PARTNERSHIPS: A general partnership is a business organization formed when 2 or more individuals or entities form a business for profit. All partners share in the management and in the profits and decide on matters of ordinary business operations by majority of the partners or by percentage ownership of each partner. Each partner is liable for all business debts and bears responsibility for the actions of the other partners. Each partner reports partnership income on their individual tax return. A partnership dissolves on the death or withdrawal of a partner unless the partnership agreement provides otherwise. Partnerships are relatively easy and inexpensive to form and require few ongoing formalities. LIMITED LIABILITY COMPANY: A limited liability company is a new and flexible business organization of one or more owners that offers the advantages of liability protection with the simplicity of a partnership, i.e. partners are not liable for business debts. Each partner reports business income on their individual tax return. LLCs may dissolve on the death or withdrawal of an owner depending on state law. An LLC is not appropriate for businesses seeking to become public or raise capital. LLCs require few ongoing formalities but usually require periodic filings with the state and also require annual fees. LLCs are more expensive to form than partnerships.
CORPORATIONS:
A corporation is a legal entity that has most of the rights and duties of a natural person but with perpetual life and limited liability. Shareholders of a corporation appoint a board of directors and the board of directors appoints the officers for the corporation, who have the authority to manage the day-to-day operations of the corporation. Shareholders are generally liable for the amount of
Part I: Discuss the various forms of organization that are available to Penelope, Mark and John
The various forms of organization available to Penelope, Mark and John are:
GENERAL PARTNERSHIPS: A general partnership is a business organization formed when 2 or more individuals or entities form a business for profit. All partners share in the management and in the profits and decide on matters of ordinary business operations by majority of the partners or by percentage ownership of each partner. Each partner is liable for all business debts and bears responsibility for the actions of the other partners. Each partner reports partnership income on their individual tax return. A partnership dissolves on the death or withdrawal of a partner unless the partnership agreement provides otherwise. Partnerships are relatively easy and inexpensive to form and require few ongoing formalities. LIMITED LIABILITY COMPANY: A limited liability company is a new and flexible business organization of one or more owners that offers the advantages of liability protection with the simplicity of a partnership, i.e. partners are not liable for business debts. Each partner reports business income on their individual tax return. LLCs may dissolve on the death or withdrawal of an owner depending on state law. An LLC is not appropriate for businesses seeking to become public or raise capital. LLCs require few ongoing formalities but usually require periodic filings with the state and also require annual fees. LLCs are more expensive to form than partnerships.
CORPORATIONS:
A corporation is a legal entity that has most of the rights and duties of a natural person but with perpetual life and limited liability. Shareholders of a corporation appoint a board of directors and the board of directors appoints the officers for the corporation, who have the authority to manage the day-to-day operations of the corporation. Shareholders are generally liable for the amount of
Cited: Sources: COMMON FORMS OF BUSINESS ORGANIZATION - http://www.tulsascore.org/organization.html Types of Business Organizations: 6 Forms of Business for IRS Purposes http://taxes.about.com/od/taxplanning/a/incorporating_2.htm Which Type of Business Entity to Choose? http://www.mynewcompany.com/entity.htm Contributions to LLCs - http://www.alberty.com/newsletter_summer01.html How LLC Members Are Taxed - http://www.nolo.com/legal-encyclopedia/how-llcs-are-taxed-29675.html Tax Implications: LLC Versus S Corporations - http://www.hutchlaw.com/library/tax-implications-llc-versus-s-corporations LLC & Asset Protection - http://www.ehow.com/about_6563015_llc-asset-protection.html LLC Business Basics - http://articles.bplans.com/small-business-legal-issues/llc-basics/186