Individuals who are sole proprietors or who have formed single member LLCs report business income on Schedule C of Form 1040.  Please use the IRS website as your source of research and provide us with information as to why sole proprietors would benefit from organizing their businesses as single member LLCs.  Please let us know if there are any disadvantages to this form of business organization.

Hana has prepared the following list of statements about corporations. Identify each statement as true or false. 1. A corporation is an entity separate and distinct from its owners. 2. As a legal entity, a corporation may buy, own, and sell property: borrow money; and enter into legally binding contracts. 3. Shareholders have the right to vote, and to receive dividends on an annual basis. 4. The profit of a corporation is not taxed as a separate entity. 5. Creditors have a legal claim on the personal assets of the owners of a corporation if the corporation does not pay its debts. 6. Ina public company, the transfer of shares from one owner to another requires the approval of either the corporation or other shareholders. The board of directors of a corporation is elected by the shareholders. 7. 8. Corporations are subject to fewer provincial and federal regulations than partnerships or proprietorships. > >

Which of the following factors does the IRS consider irrelevant when determining reasonable compensation for a shareholder-employee of an S corporation?    Timing and manner of paying bonuses to key people.  Dividend history.  Consistent amount of compensation year after year.  Compensation agreements.

The earnings and losses from a sole proprietorship are reported on O the sole proprietorship's state income tax return O the sole proprietorship's federal income tax return O the sole proprietorship business license form O the individual sole proprietor's personal income tax return