Soleiman Law Group Case Study

A sole proprietorship is the simplest and most common structure chosen to start a business. It is an unincorporated business owned and run by one individual with no distinction between the business and you, the owner. You are entitled to all profits and are responsible for all your business’s debts, losses and liabilities.

The second alternative is a corporation. One can form as an S corporation of C Corporation. “A C corporation is double-taxed. The corporation pays taxes, as do the company’s shareholders. S corporations are single-taxed. All taxation and business expenses are paid for by the company’s shareholders” (Small Business – Chron.com, 2015). There are some advantages to this form. You are not personally liable for lawsuits and debt. It is easier to attract investors for your business. S corporations are “limited to a maximum of 100 shareholders and a C corporation can have unlimited shareholders” (Small Business – Chron.com, 2015). The corporation is “a stand-alone entity, which means you are not personally liable for the assets and debts of the business” (Small Business – Chron.com, 2015). “The stand-alone entity also separates tax liabilities, which is another advantage. This means that the corporation taxes are separate from your personal tax liabilities. As a business owner, you are responsible for paying taxes only on the money the corporation pays you in the form of a salary, commission or dividends--this is on your personal tax return. The corporation is responsible for paying corporate taxes (at the corporate tax rate) on any profit the company makes” (Small Business – Chron.com, 2015). There are also some disadvantages. First, the costs can be a disadvantage. “One of the primary disadvantages of a corporation is the costs for running a corporate form of

Ownership of C corporation is represented by shares of the stock, or shareholders, it is the most common type of the business, where ownership to the shareholders offers a limited liability to all its owners.

The limited liability partnership (LLP) is another type of partnership. LLP is “a partnership consisting of one or more general partners and one or more limited partners” (p. 554). “It was created to limit the personal liability of the partners of "losing their personal assets to only their own acts and omissions and to the acts and omissions of people under their supervision” (Nickels, McHugh, & McHugh, 2013, p. 119). This business form also “allows a partnership to continue as a pass-through entity for tax purposes” (Miller, 2014, p. 554). However, limited liability partnership is not recognized as a legal business structure in every state, unlike the general partnership, In addition, taxing authorities in some states recognize the

The business-failure rate at 90 percent, which fluctuates when factoring in industry type, deters most entrepreneurs. For this, it is imperative to evaluate the overall opportunity cost when deciding to become a business owner. To produce a strong business plan, one must consider the following— the studying and surveying of the desired business’s market, legal requirements, start-up costs, and the business’s operations.

An own family commercial enterprise may be organized as a partnership, limited legal responsibility employer (LLC), an S business enterprise, or as a C organization. even though a C employer has the biggest tax benefits, any dividend profits will be the challenge to double taxation. furthermore, S and C groups are greater complicated business entities and extra taxes, which includes the nation corporate franchise tax, could additionally be paid. A limited legal responsibility corporation with 2 or extra participants is taxed as a partnership, and while preferred partnerships are clean to arrange, they are able to have complex tax consequences.

When starting a business an individual needs to know what type of business structure they will have. After looking at all the types of structures for a business, I decided to go with a sole proprietorship business. I choose the sole proprietorship structure because it is the simplest structure out of all of the structures. The owner has complete control to run the business as they would

Sole proprietorship is the simplest way to start up a business, it is not incorporated which means that there is no distinction between the Business and Herring.

When setting up a business, the idea is only a part of the process. It is also necessary to consider the way in which the business itself will be set up in order to function. There are three basic structure which may be used; sole proprietor, partnership

The actual business structure of these arrangements usually involves establishing a holding entity that owns assets and an operating entity that uses the assets. Of course, setting up this arrangement should be done in such a way that business assets are protected from personal creditors and personal assets can 't be targeted by the business, but this takes careful planning. The operating entity conducts business and bears any risks of

There are different aspects of each type of business structure, sole proprietorship, partnership, LLC, and corporation. A sole proprietorship is “a business owned and operated by a single person. The business has no legal existence from its owner” (Rogers, 2012). This also means that the sole proprietorship is liable for everything, debts, lawsuits, taxes, etc. In a partnership, “an association of two or more competent persons to carry on a business as co-owners for profit. The business itself is not a legal entity” (Rogers, 2012). In a partnership any members of the partnership, which has to be more than two persons, can be held liable for the same as a sole proprietorship, the debts, taxes, etc. There are also limited partnerships which will be created when filing with the state, with one general and at least one limited partner. This makes it so the limited partner will not be personally liable for the debts of the business. An LLC, Limited Liability Company, can be formed via an application to the state and will try to combine the advantages of partnerships and corporations. Therefore, an LLC will protect an individual more than a partnership would. Lastly, a corporation is “a business entity that is formed through application to the state, which allows shareholders limited liability. Corporations have the legal status of persons and a corporation will also protect the individual, much like an LLC would.

In an S Corporation, profits and losses can pass through to your personal tax return. The business itself is not taxed. Only shareholders are taxed. However, any shareholder employees must pay themselves reasonable compensation. The shareholder has to get fair market value, or the IRS could reclassify additional corporate earnings as wages.

Today’s business world has many choices for the new entrepreneur to decide from when forming a business. The choices are sole proprietorship, partnership, limited liability partnership, a limited liability company, a S corporation, a franchise, and a corporate form. Development of scenarios portraying each of these forms of business will aid the entrepreneur with deciding which form will be the best choice for the business.

A corporation is formed under the laws of the state in which the corporation is registered (SBA.gov). Corporations can either be a C-Corp or an S-Corp; in which both have owner shareholders. Forming a corporation requires establishing and registering your business with your state government and filing documents named Articles of Incorporation. These documents are filed with your Secretary of State in order to provide information to the state about your business and are also made available to the public (SBA.gov). Generally, corporations provide limited liability for all owners (Sumutka, 2009).

However, I would not let the possibility of any wrongdoings committed by the company, stakeholders, or employees discourage you from reading more on an LLC. In fact, you will learn some advantages that make this type of venture appealing. For instance, you may continue to be the sole owner of the company if you choose or you could have family and friends invest in the company as limited partners. By doing this, you and the members can elect who will be in charge of performing certain tasks, such as overseeing day-to-day operations. Furthermore, you and the members decide how profits and losses are shared amongst one another. The percentage may be based on capital invested by each member or a mutual agreement. Whichever route you choose, make sure you have it in writing before proceeding.