Week 6 You Decide
To: Penelope, Mark, and John
From: Redacted.
Date: 4/12/14
Subject: Entity Selection
Facts: After 20+ years of working for other firms, Penelope (enrolled agent, age 41), Mark (CPA, age 43), and John (CVA, age 65) want to leave the firms they are currently employed by and become their own bosses. Penelope specializes in taxes, Mark is the auditor, and John is a business valuation expert.
There are so many options available as to how they can structure the new business. The appropriate business entity for any individual(s) will depend on their particular facts and circumstances.
You are a valued colleague and friend of this threesome, and they have come to you seeking advice as to how to structure their new business. They have the knowledge to figure it out themselves but are looking for the advice of an unbiased third party. Please consider the following tax and nontax considerations as you recommend an entity choice to Penelope, Mark, and John.
Part I: Discuss the various forms of organization that are available to Penelope, Mark, and John.
In general terms, the entity that you will be choosing will be some form of partnership. In broad definition, a partnership is defined as a single business where two or more people share ownership, with each partner bringing specific contributions to the business. Since each member of the partnership will be taking on specific functions and liability with the partnership, it is extremely important that all agree on the specific structure that the partnership will take. The purpose of this memo is to provide an educated and unbiased opinion on what structure that partnership should take.
Partnerships are commonly organized as General Partnerships, Joint Ventures, or Limited Partnerships (limited liability). For the purposes of this memo, we will stick to forms of Limited Partnerships as the current economic climate necessitates a business structure that limits the liability of its owners. Common forms
From: Redacted.
Date: 4/12/14
Subject: Entity Selection
Facts: After 20+ years of working for other firms, Penelope (enrolled agent, age 41), Mark (CPA, age 43), and John (CVA, age 65) want to leave the firms they are currently employed by and become their own bosses. Penelope specializes in taxes, Mark is the auditor, and John is a business valuation expert.
There are so many options available as to how they can structure the new business. The appropriate business entity for any individual(s) will depend on their particular facts and circumstances.
You are a valued colleague and friend of this threesome, and they have come to you seeking advice as to how to structure their new business. They have the knowledge to figure it out themselves but are looking for the advice of an unbiased third party. Please consider the following tax and nontax considerations as you recommend an entity choice to Penelope, Mark, and John.
Part I: Discuss the various forms of organization that are available to Penelope, Mark, and John.
In general terms, the entity that you will be choosing will be some form of partnership. In broad definition, a partnership is defined as a single business where two or more people share ownership, with each partner bringing specific contributions to the business. Since each member of the partnership will be taking on specific functions and liability with the partnership, it is extremely important that all agree on the specific structure that the partnership will take. The purpose of this memo is to provide an educated and unbiased opinion on what structure that partnership should take.
Partnerships are commonly organized as General Partnerships, Joint Ventures, or Limited Partnerships (limited liability). For the purposes of this memo, we will stick to forms of Limited Partnerships as the current economic climate necessitates a business structure that limits the liability of its owners. Common forms