Valeri is opening a hair salon, but she does not know whatbusiness form it should take. What can you tell her aboutthe advantages and disadvantages of operating as a soleproprietorship versus a corporation?

Valeri is opening a hair salon, but she does not know whatbusiness form it should take. What can you tell her aboutthe advantages and disadvantages of operating as a soleproprietorship versus a corporation?

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter6: Accounting For Financial Management

Section: Chapter Questions

Problem 8Q

See similar textbooks

Related questions

Q: Ahmed owns the business Al-Shifa diagnostics and Mohammed works there as an employee. Which of the…

A: Owner is the person who own the business and responsible for all the profits and losses of the…

Q: iggy, owner of Jaguar Security Agency offers security services unto Honest Industries Co. of which…

A: The contract refers to the legal form of agreement between parties that reflects the duties and…

Q: I Have This Question. I need an answer relevant to US Tax Code. 5). Leno Hardware is owned…

A: A sole proprietorship is the business arrangement in which the owner will be the sole owner of the…

Q: As we evaluate job related expenses, are self-employed taxpayers facing a considerable disadvantage…

A: As a self-employed / freelancer, you most likely have a level of freedom that your traditionally…

Q: Omar, an individual in the 37% tax bracket, wants to shift some of his income to a new corporation…

A: Omar wants to shift some of his income to a new corporation to take advantage of the corporate tax…

Q: Margaret's tax return is prepared, but she does non have the money to pay the amount due. She…

A: The Internal Revenue Service (IRS) is delaying the filing deadline for all individual tax returns…

Q: Joe Doe just started a business. He wants the business income to flowdirectly to his own personal…

A: Limited liability company is the type of company which has features of a sole proprietorship and…

Q: Candace is considering incorporating her photography business and knows that there are many…

A: The business incorporation of the photography business represents the sole proprietorship that…

Q: The most that the owner of a sole proprietorship can lose, as a result of business debts or…

A: A sole proprietorship is a form of business that is operated and controlled by a company, individual…

Q: Nancy and her daughter, Kathleen, have been working together in a cattery called "The Perfect Cat."…

A: Tax is the liability paid to government and calculated on the income earned.

Q: Joey lives in North Carolina, a common law state. He is a shareholder in an S corporation. If he…

A: S corporations are ordinary business corporationst that elect to pass corporate income, losses,…

Q: Here is another problem: Miranda is in the process of forming a corporation. She wants to…

A: Answer:The advantages of loaning the corporation are:Fixed interest rate: The lender will be…

Q: Rose, Jean and Dorothy have been trading as a partnership for the last three years. However, their…

A: TAx refers to the amount charged by the government from the individuals and corporations on their…

Q: Nicholas is a software engineer and is starting a consulting practice. What form of…

A: Proprietorship also is known as sole proprietorship is an ownership type where a single person owns…

Q: Susan is heading up and forming a company to transport toxic materials. She will need substantial…

A: As per Given information limited partnership will be best organizational form for Susan to use. In…

Q: Franklin, John, Henry, and Harry have decided to pool their financial resources and business skills…

A: Business entity: A business organization which is created by one or more persons and governed by…

Q: What are the advantage and disadvantage of hiring an independent contractor? What would be the…

A: The advantages of hiring an independent contractor are the followinga) Reduction in staff cost- The…

Q: 5). Leno Hardware is owned and operated as a sole proprietorship by Larry Leno. The location…

A: When the situation arises to sell your business where the buyers are around the corner, the seller…

Q: hich one of the following taxpayers is potentially eligible for a qualified business income…

A: Qualified Business Income Deduction: The qualified business income deduction (QBI) is a tax…

Q: r spouse has just accepted a new job as an Accountant at an SEC restricted audit client. Which…

A: An accountant is a professional who performs accounting duties such as account analysis, auditing,…

Q: Cara wants to make sure that her stock portfolio will not have to go through probate when she dies.…

A: Given, In this question, there are some substitutes for Cara to use and we have to choose the better…

Q: Chloe has her own office where she generates investment advice for companies. She is compensated for…

A: The recommendation given to the client or any company related to investment portfolio is termed as…

Q: Uncle Fudd has decided to sell his ownership in CougarConstruction, Inc., to Cousin Elmer. How would…

A: Fair price per share is the price which is appropriate for a share price to pay in order to buy that…

Q: Sebastian, Wyatt, and Mathew are close friends who graduated with master's degrees in accounting…

A: The legal identity of a Limited Liability Partnership (LLP) is distinct from that of its…

Q: In connection with the application of the kiddie tax,

A: Internal Service Revenue [IRS] of USA tries to prevent tax evasion by…

Q: Sebastian, Wyatt, and Mathew are close friends who graduated with master's degrees in accounting…

A: The legal identity of a Limited Liability Partnership (LLP) is distinct from that of its…

Q: Linda and her sister Hannah own a bed and breakfast hotel in Maine in which they provide maid…

A: According to the given question, we are required to find the correct option from the available…

Q: ghter, operate a local restaurant as an LLC. The MD LLC earned a pro quired by gift from Mona.…

A: Allocated revenue is the term used to describe income that is completely taxed. You can't deduct…

Q: If Margo and Bruce purchase and operate an ice cream store, for tax purposes they have formed a…

A: Partnership: When two or more person come together and agree to become partners and share the profit…

Q: Advise Mr. Chan.

A: Tax is the liability that has to be paid by the individual and the corporation to the Federal…

Q: Mallory would like to create an irrevocable trust for her children that will remove assets from her…

A: An irrevocable trust cannot be changed after being made without the permission of the beneficiary.

Q: Which of the following is not an economic entity? А. Aldo, Baldo, Calvo & Associates, a law firm St.…

A: Law firm is a firm of advocates which provides the service of law. Piggery is a farm or place where…

Q: Mary owns a business in California. She wants to know what she has to do about withholding from her…

A: (1) Mary owns a Business in California. She has to withhold certain portion of the Employees wages.…

Q: Kate and Mark, a married couple, own a limited liability company. Although Kate and Mark are not yet…

A: C)A cross-purchase buy-sell agreement between Kate, Mark, and the children

Q: Chloe has her own office where she generates investment advice for companies. She is compensated for…

A: B. Chloe does not have to be a registered adviser if she doesn’t have authority to make investment…

Q: ight or Wrong 1. A senior citizen earning minimum wage is exempt from income tax and exempt from…

A: Since you have posted a question with multiple sub-parts, we will solve the first three sub-parts…

Q: If a client had used a commission-free broker to trade stock options, but the client is dependent in…

A: Brokers like ZERODHA,UPSTOX,FYERS,PROSTOCK AND INDIABULLS offer brokerage free investment in the…

Q: ABC Corporation’s CEO owns a condominium in Bahamas where top executives and their spouses stay,…

A: Here discuss about the details of taxation issues which are incurred for the benefits provided to…

Q: Alyssa and Becky are suddenly successful candy makers and have been advised to organize their…

A: An individual or a group of individuals can organize a business organization by using different…

Q: violations of the rules of conduct of the Code of Professional Ethics

A: Unqualified opinion is an audit opinion in which the auditor gives a clean chit on the affairs of…

Q: In 2016, Mr. Karim signed a legal agreement with Deli Potatoes Inc. and became an investor pumping…

A: Legal agreement can be defined as the written document being signed between two parties over certain…

Q: Is this statement True or False?

A: The tax charged on various forms of legal business organizations varies. The partnership is the…

Q: Sonya wants to become a Certified Public Accountant. Therefore, she decides to go to college and…

A: Tax is a charge which is charged to the taxpayer for having excess income which is over the…

Question

Valeri is opening a hair salon, but she does not know what
business form it should take. What can you tell her about
the advantages and disadvantages of operating as a sole
proprietorship versus a corporation?

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

Nicholas is a software engineer and is starting a consulting practice. What form of businessorganization limits his liability to the amount he has invested in the business?a. Proprietorshipb. Partnershipc. Corporationd. None of the above
Three ladies decide to go into business publishing cookbooks. They form a corporation, having been told that the corporate form of ownership carries limited liability. They decide not to purchase any form of liability insurance for the corporation because their loss in the event of an uninsured liability loss will be limited to the amount of their initial investment. Is there a fallacy in their logic?
Joe Doe just started a business. He wants the business income to flowdirectly to his own personal tax return, but he wants to make sure that hehas limited liability. What form(s) of business ownership would you recommendfor Joe?
What would be the total allowable organizational expenditures if Nicole started a sole proprietorship instead of a corporation?
Sam is deciding whether he should operate his business as a C corporation or as an S corporation. Due to potential environmental hazard problems, it is imperative that the business have limited liability. Sam is leaning toward the S corporation form because it avoids double taxation. However, he is concerned that he may encounter difficulty several years in the future is he decides to issue some preferred stock to his son as a way of motivating him to remain active in the business.
If you were starting a business, what tax considerations might cause youto prefer to set it up as a proprietorship or a partnership rather than as acorporation?
Do those who are unable or unable to operate under a conventional corporation's limitations have a predisposition toward starting their own business? Is there a reason for this or not?
Robert is the CEO of a closely held business, and he would like to provide life insurance to all of his employees as a fringe benefit. Robert would like life insurance that permits him to pay the premium, so long as it is deductible as a business expense and permits the employee to designate the beneficiary of the policy. Which one of the following is the most appropriate insurance product for Robert's situation? A)Robert should enter into an entity buy-sell agreement with each employee using cash value life insurance. B)Robert should provide group term life insurance. C)Robert should provide key person life insurance. D)Robert should provide split-dollar life insurance.
Margie and her sister, Jan, each own half of the shares of a closely held business. Margie is concerned about what will happen to the business if Jan dies because Jean just married a man who Margie cannot stand. Jan is also concerned because, although Margie is currently single, she has children from a prior marriage who Jan feels are spendthrifts. Neither sister is ready to quit the business and retire. Neither sister is financially able to pay a gift tax or a capital gains tax. Which one of the following is the most appropriate business transfer technique for Margie and Jan to use in this situation? A) A private annuity agreement between the two sisters B) A cross-purchase buy-sell agreement between the two sisters C) An installment sale contract between the two sisters D) A preferred stock recapitalization of the business
Which of the following is correct? 1 It would be cheaper for ABCL to own and pay for the insurance policies because the corporate earnings in a small business corporation like ABCL are sheltered from tax, therefore the funds required to pay the insurance premiums could come out of completely tax-free corporate earnings. 2 It would be cheaper for ABCL to own and pay for the insurance policies because the company can deduct the premiums paid as a business expense, while the individuals would have to pay the premiums with after-tax dollars. 3 It would be cheaper for ABCL to own and pay for the insurance policies because a portion of corporate earnings in a small business corporation like ABCL are only taxed at around the 20% marginal rate, therefore lesser pre-tax corporate earnings would be required to generate the necessary after-tax funds to pay the insurance premiums. (A) 1 only. (B) 2 and 3 only. (C) 1 and 2 only. (D) 3 only.
Sebastian, Wyatt, and Mathew are close friends who graduated with master's degrees in accounting from an Ivy League institution. Instead of seeking employment, the friends decided to create their own accounting business. At their initial meeting, the friends could not decide whether to form a partnership or a limited liability company. You were approached as a company law student for advice on the type of business that would be appropriate for the friends. (a) What kind of business would you suggest to the friends? Justify your recommendation. Your reasoning should not be more than 500 words and should cover the following points: the requirement for the registration of the business in Jamaica, the advantages and disadvantages of the business type and information on the dissolution of the business. (b) Assume the friends opted to create a partnership, and has asked for your assistance in creating a Partnership deed; create a partnership deed that…
The first step in forming a sole proprietorship is filing out the appropriate paperwork and paying the necessary filing fees with the secretary of state in the state where the business will operate. True false S corporations and closed corporations' earnings are exempt from federal and state income taxes based on a commitment to reinvest in local communities. True false