1. Introduction: Business can be started through different forms of organization. Forms of organization business includes sole proprietor, partnership firm, company, etc. To determine : Recommendation of form of business organization, tax impact and advantages. Form of business organization − Partnership Firm since they have debts and through mutually, they can collect on money to buy computer equipment. Also, since they are three persons who have specialized knowledge and skills, through partnership they can complement each other skill. Tax Impact − Income of partnership firm will be taxed and individually apart from profits, any other benefit from partnership firm, will be taxed in the hands of each partner. Advantages − 1. Through partnership, people can complement each other skill and thereby more chances of success. 2. There will be less legal formalities and thereby easy to start. 2. Introduction: Business can be started through different forms of organization. Forms of organization business includes sole proprietor, partnership firm, Company, etc. To determine : Recommendation of form of business organization, tax impact and advantages. Form of business organization − Company since they don’t have funds and through forming a company, they have more chances of getting the funds. Tax Impact − Income will be taxed in the hands of the company only. Advantages − 1. Liability of the owners will be limited to the funds contributed by them. 2. More chances of raising the funds. 3. Introduction: Business can be started through different forms of organization. Forms of organization business includes sole proprietor, partnership firm, Company, etc. To determine : Recommendation of form of business organization, tax impact and advantages. Form of business organization − Company since he needs fund and also have relevant knowledge of documentation requirements for the company. Tax Impact − Income will be taxed in the hands of the company only. Advantages − 1. Liability of the owners will be limited to the funds contributed by them. 2. More chances of raising the funds.

FINANCIAL ACCT-CONNECT

8th Edition

ISBN: 9781266627903

Author: Wild

Publisher: INTER MCG

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Chapter D, Problem 1E

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Solution Summary: The author explains that business can be started through different forms of organization, including sole proprietor, partnership firm, company, etc.

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