remains in existence. Some corporations may be able to elect treatment as an S corporation‚ which exempts them from federal income tax other than tax on certain capital gains and passive income. (Business Formation‚ n.d.). Like the previously discussed entities‚ a corporation also has disadvantages. Formation requires more time‚ money and formalities. Corporate income is taxed twice. A corporation cannot deduct from its business income any dividends payed to its shareholders. (Business Formation‚ n.d.)
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Piercing the corporate veil describes a legal decision to treat the rights or duties of a corporation as the rights or liabilities of its shareholders or directors. Usually a corporation is treated as a separate legal person‚ which is solely responsible for the debts it incurs and the sole beneficiary of the credit it is owed. Common law countries usually uphold this principle of separate personhood‚ but in exceptional situations may "pierce" or "lift" the corporate veil. A simple example would be
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partnerships. • Corporation: A business corporation is a for-profit‚ limited liability entity that has a separate legal personality from its members. A corporation is owned by multiple shareholders and is overseen by a board of directors‚ which hires the business’s managerial staff. • Cooperative: Often referred to as a "co-op business" or "co-op"‚ a cooperative is a for-profit‚ limited liability entity that differs from a corporation in that it has members‚ as opposed to shareholders‚ who
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organizations. The advantages of a sole proprietorship are that the only paperwork the sole proprietor needs to be concerned with‚ when forming the business‚ is state and local permits‚ licenses‚ and any special certificates that might be needed. No other legal actions need to be taken for a sole proprietorship to be established‚ saving time and money. The disadvantages of a sole proprietorship are that the individual owner is personally liable for the activity of the business. The personal assets of the
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Business Form - Noncorporate Business Arrangements’. CRICOS Provider Code 00301J Learning outcomes After completing this topic you should be able to: • distinguish the various business organisations that are found in Australia; • understand the legal consequences of operating different kinds of business organisations; • understand the terminology used in relation to different business organisations; and • explain how different business organisations are created and operated. Types of business
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(Barringer & Ireland‚ 2010). The sole proprietorship is the low cost alternative in both start up and in maintaining costs. They usually only require a business permit in order to operate. However‚ the sole proprietorship opens the owner up to increase legal liabilities as the income is reported as personal income and thus usually encompasses the owner’s personal assets. Not only does this type of organization have limited resale value. The sole proprietorship is also noted to have significantly higher
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Shania is looking to open a coffee shop in the state of Colorado. She is having trouble making the decision on what business form to choose. Shania has had an offer from a large franchise‚ but she is contemplating on becoming a sole proprietorship or even a partnership instead. Each business form has certain pros and cons‚ Shania will have to consider each one before many any large business decision. The first business type most commonly considered is the option to become a sole proprietorship
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E-commerce is one of the trending topics in today’s world‚ and in the Indian context‚ the e-commerce industry is led by the Indian giant – Flipkart. With brick and mortar stores and offline selling of products being touted as “old fashioned”‚ the online commercial players have been able to case a revolutionary change in the purchasing mindsets of customers by launching several innovative services such as same day delivery of products‚ attractive discounts and offers etc. The price benefit It is
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Sole Proprietorship Sole proprietorship is the most common form of business in the United States. It is a relatively simple way for an individual to start a business since legal costs and business requirements are minimal‚ and the owner has complete control over the business. Though a sole proprietor is not responsible for any corporate tax payments‚ the owner is responsible for taxes incurred on the income generated from the business as part of his or her personal income tax payments‚ and personally
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The sole proprietorship is the easiest form of ownership to create‚ but once formed‚ it is subject to the greatest number of regulations. 15. If a sole proprietorship fails‚ the owner is not liable for its debts since the business is a separate legal entity. 16. Although not required by law‚ a written partnership agreement that spells out the terms of operating the partnership and the status of each partner should be developed. 17. A general partner is personally liable only for the amount of money
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