Week 6 You Decide

Income Taxes- Taxes are paid as income tax, unless the limited partnership is classified as a corporation by the IRS for tax purposes. In order to keep from being taxed this way, you would have to stick solely to the contract as written, and keep away from operating outside of the agreement.

a partners that might end or dissolve partnership. One of the main drawbacks of a

Part I: Discuss the various forms of organization that are available to Penelope, Mark and John. There are a few different options from which you can chose to organize your business under. For example: partnership, LLP, S Corporation, C Corporation for which I know you are all familiar with. It is my duty to give you my own educated and unbiased opinion to which would be most beneficial to all of you.

Part 1: Define each of the following terms as they are used in the context of the study of personality (20 pts.)

For the states that don't allow separate reporting, the LLC is said to be transparent meaning it does not report separately from the individual. The $300,000 is also will be considered part of lawyer’s income as all income includes all monies derived from all sources and it will be taxable income.

The managing member’s share of the profits is considered earned income and is therefore subjected to the self-employment tax. Also a member of an LLC cannot pay themselves wages from the profits of the LLC. “The great flexibility that is afforded by an LLC makes it one of the most popular types of business formations used” (Waller).

The partnership is a form of business that could be possible in Shania’s scenario due to the other individuals showing interest in the business idea. She can create a partnership with one or more persons and sharing of the profits is divided equally, unless an agreement states otherwise (Kubasek, et al., 2015, p. 423). Some of the benefits of a partnership are the ability to raise more capital and to share ownership responsibilities (Block, et al., 2015, p. 9). With committed partners it is possible to have a successful partnership.

In this business formation the business takes on all liability removing any personal liability from all involved partners.

For the diversified shopper, short on time, Q-saver provides the knowledge of savings and variety with the convenience of different stores and products. Q-saver is not affiliated with just one or two stores. The smartphone and tablet app provides access to a wide variety of stores and products, providing access to current sales promotions, brand coupons, availability and so on. The objective is to position the app in the coupon app industry to best serve the market segments concerned with time management, savings and variety. Q-saver differentiates itself from competitors by providing access to a wide array of different stores’ information as well as sales promotions, providing guidance to what promotions can align with what manufacturer coupons to get the best savings, providing services such as scan and compare, the comparison of savings with consideration of other stores and so on. The application will constantly be evolving to better serve the well-informed shopper; requesting feedback and most importantly, acting on the feedback to provide the best product possible.

Concerning your answer to LA1Q1, I agree with you that a sole proprietorship would be the best choice. However, I disagree with your statement that “once he starts, Owen cannot bring others into the business”. That is true to the extent that bringing partners in will end the sole proprietorship, but he is free to transition his business into a partnership (The legal and ethical environment of business, 2014, pg. 352). I believe that many businesses grow and evolve over time and over the life of a business may have various business organizational structures.

We do not pay taxes on the partnership, though we should report income or losses on our individual tax returns. We will be personally liable to the extent of the full amount of partnership’s obligation and each of partners is liable for the acts of others and to others.

Tax Laws: An LLC can elect under the check-the-box rules to be classified as a corporation. So it transfers all assets and liabilities to the corporation in exchange for the corporation’s stock and then (2) distribute the stock to its owners in complete liquidation (Regs. Sec. 301.7701-3(g)(1)). The deemed transfer to the corporation is tax free, assuming Sec. 351(a) applies and the LLC’s liabilities do not exceed the basis of its assets. The LLC can then elect S status, assuming that its members are eligible to hold S corporation stock (Regs. Secs. 1.1361-1(c) and

The benefit of Shania setting up her business as a limited partnership is that she, being the only general partner and liable for all debt, will be the one who manages the daily operations and executive decisions for the business. Limited partners, since they are only liable for the capital the contribute, they possess no authority in regards to making important decisions for the business and other managerial responsibilities solely designated for general partners. For Marvin’s case, Shania’s husband, the formation of a limited partnership is best. Marvin only wanted to contribute to Shania’s dream, not take a great role in managing her affairs.

* This is a partnership firm. Where the two of us does the most of the work.

The couple should operate as a limited companies structure as opposed to a sole trader or joined partnership. Choosing a limited company may be difficult to setup compared to the other two