Comparing Pros and Cons of S Corporations and LLC's

There are three types of business entities: sole proprietorship, partnerships, and corporations. Sole proprietorships are businesses owned by an individual person. They are easy to form, but are not taxed. Instead the individual business owner is taxed on any monies acquired on behalf of the business (Kubasek, 2012. Partnerships are businesses that are owned by more than one individual owners. The big thing about partnerships is that each partner is personally responsible for the acts of the other partners in the business . (Kubasek, 2012 Corporations are businesses owned by multiple people to include shareholders (Kubasek, 2012). They can sue and be sued and are subject to a host of rules and regulations set forth by the government.

The organizational forms a company might have as it evolves from a start-up to a major corporation are: sole proprietorships, partnerships and corporations. The advantages of a sole proprietorship are that is is easily and inexpensively formed; is subject to few government regulations and it’s income is not

both a and b (Yes.  The corporate structure provides for limited liability and ease of transferring ownership.)

I think a partnership is the best business organization for a company. A Partnership consists of two or more individuals in business together. Normally, all general partners have an equal voice in management. Partnerships have many advantages, for example, Partnerships are relatively easy to form; No corporate income taxes. Partnerships declare income by filing a partnership income tax return. Yet the partnership pays no taxes when this partnership tax

• Income Taxes: S- Corporations are tax paying entity, the business files tax returns but not taxed on earnings. The stockholders claim losses or profits on their personal tax returns.

| If all members of a new foreign entity have limited liability, the entity is classified as an association taxed as a corporation.

Federal tax rates on corporate taxable income vary from 15% to 35%. State and local taxes and rules vary by jurisdiction, though many are based on Federal concepts and definitions. Taxable income may differ from book income both as to timing of income and tax deductions and as to what is taxable. Corporations are also subject to a Federal Alternative Minimum Tax and alternative state taxes. Like individuals, corporations must file tax returns every year. They must make quarterly estimated tax payments. Controlled groups of corporations may file a consolidated return. Partnerships have flow-through taxation which means that the entity does not pay taxes on its income. Instead, the owners of the entity pay tax on their "distributive share" of the entity's taxable income, even if no funds are distributed by the partnership to the owners. Estates and nongrantor trusts must file income tax returns just as individuals do, but with some important differences. For one, their income is taxed at either the entity or beneficiary level depending on whether it is allocated to principal or allocated to distributable income, and whether it is distributed to the beneficiaries. And because their exemption amounts, tax brackets and related thresholds haven’t been indexed for inflation or modified for tax relief to the extent those for individuals have, they can be

Determining what type of business venture to either start or invest in can be challenging. Over the next several pages we will evaluate the various types of business organizations and at the end of this report; you should have an initial or better understanding of the different types of business forms.

I find the Limited Liability Partnership to be the best form of organization for your

Waller, J. (2012). Business Formation Benefits and Risks: LLC most flexible, corporation most protective. Alaska Business Monthly, 28(6), 20.

The corporation structure has multiple owners and operators and is complex and expensive. A corporation is an independent legal entity owned by shareholders. The corporation itself is legally liable for the actions and debts of the business. The advantages of a corporation structure are limited liability, ability to generate capital, corporate tax treatment, and attractiveness to potential employees. The disadvantages are time and money, double taxing, time, and paperwork. Corporations pay income tax on their profits. In some cases, corporations are taxed twice – first, when the company makes a profit, and again when the dividends are paid to shareholders on their personal tax returns (U.S. Small Business Administration, 2013).

The corporation and stockholders have the tax burden in a corporation. In whole, from the owners’ point of view, it is more sensible to form a corporation that has a little more flexibility and less liability versus a partnership or sole proprietorship.

There are five standard business entity types, and each will have pros and cons from a business and tax standpoint. You will need to select which entity you will be, and file the correct legal paperwork at the onset of your new venture. The five business entities are:

In this task, I will be evaluating the advantages and disadvantages of s partnership and private limited company. How majority shareholders protect their interests on the board of directors. Clarifying the rights and duties of a company director and how one is appointed to being a manager director. In addition the rights and duties of company auditor as well as their liabilities as an auditor.

The most common forms of business are the sole proprietorship, partnership, corporation, S corporation, and Limited Liability Company (LLC). The LLC is a relatively new business structure allowed by state statute. The sole proprietorships are the simplest form of business. The owner is only one person and