Personal Recommendation As A Business Planner And Accountant
1694 WordsJan 23, 20177 Pages
The purpose of this memo is to aid in Mrs. Gloria Smithson’s decision on which classification of business she should open with my personal recommendation as a business planner and accountant. The intention of this report, is to provide an overview of three different types of business formations that are being recommended for consideration. A significant amount of research into the business law will be further needed prior to the opening of the business to determine which state is best to incorporate into based on their own business laws. In addition, there are an increasing number of hybrid versions of business formations that should be explored in the chosen state once the overall type of formation has been selected. With this being…show more content… Besides fraud cases personal assets of the owners, partners, shareholders cannot be seized to repay debts. For a corporation, “The limited liability of shareholders means that they are liable only to the extent of their capital contributions and do not have personal liability for the corporation’s debts and obligation.” (Cheeseman, 2013, 479) In a LLLP there are two types of partners, general and limited. Both types hold, “...No personal liability for partnership’s debts and obligations...” up to the “capital contribution” (Cheeseman, 2013, 472) that was given to the company. The same liability is set for the LLC styles of business, “members of an LLC are not personally liable to third parties for the debts, obligations, and liabilities of an LLC beyond their capital contribution.” (Cheeseman, 2013, 536) All three boost an impressive corporate veil to protect personal assets. A corporation will become the most useful to the company long term if to plans to go global with its widget and is the recommended business type. This type of business formation will allow for the separation of responsibility in the company and who ultimately is the owner. “This category contains entities that generally have the following three constituents: shareholders, officers, and directors.”(Franklin, 2016, p. 581) This way all parties looking to invest and contribute to the business can have a