Liability

formations. If someone wants to develop a business, they can form a sole proprietorship, partnership, limited liability company, or a corporation. A sole proprietorship refers to a business that is owned and managed by one person. A partnership is a business where two people agree to be co-owners of a business and general participate in management and share the incoming profits. A limited liability company is relatively new in terms of business formations. It is a company that is a combination…

proprietorship fully rests upon the owner. The income of the Sole proprietorship is considered as the income of the business owner and tax applied to it is not the corporate income tax, but the personal income tax that ranges from 0% - 20%. Limited Liability…

register their business as a corporation, limited liability company (LLC), professional service or a nonprofit association. Although, a business owner may open a sole-proprietorship or a partnership these choices will not be considered because they do not provide limited liability protection for the business owner. Limited liability is protection to the business owner just like a corporation. Business owners are protected from personal liability for business debts and claims. Meaning, it the…

The S Corp shareholders’ personal assets cannot be seized in order to fulfill the business’s financial obligations or liabilities. The S Corp is also treated as a pass-through entity for federal tax purposes. Unlike the C Corporation, individual shareholders of the S Corp avoid double taxation (taxes at both a corporate level and again at the shareholder level). Each S Corp…

There is something to be said about with whom a person goes into business. In the 1980’s, my brother and two friends formed a partnership doing surveying in Colorado. Shortly after getting established, the two friends ousted my brother and took all of the money. There was an IRS audit in which a gain was determined, and my brother was included in the assessment. He quietly paid it, then one day, he received all of his money back; his “friends” paid the assessment not knowing it was paid. We…

Partnership Characteristics “A partnership is defined as an arrangement in which two or more individuals share the profits and liabilities of a business venture, where all partners might share liabilities and profits equally, or some partners may have limited liability” (partnership). The characteristic of the taxation in partnership business clear in finding its advantage and disadvantage to general partner business. In comparison to sole proprietor, a partnership business has an advantage…

Free Enterprise System Free enterprise is a system where the government has very few limitations on business activities and ownership. In this system this government has minimal ownership of an enterprise. The U.S. economic system of free enterprise operates according to five main parts: the freedom to choose our businesses, the right to private property, the profit motive, competition, and consumer sovereignty. In free enterprise you have a right to own and do all of the main parts the the…

partnership. They both have sharing ratio for profits/losses. It depends on the capital contribution or they may decides equally or any ratio. Say 1:1 which is equally, 1:2 etc. In any losses both will be liable for it. 3. Limited Liability Company:- The Limited Liability Company, also…

it would be a limited liability corporation. A limited liability corporation is, “A company (LLC) in the United States-specific form of a private limited company. It is a business structure that combines the pass-through taxation of a partnership or sole proprietorship with the limited liability of a corporation” (Webster, 2004). I believe that this is the perfect fit…

2.1 DEFINITION Coyle (2000) defined Mergers and Acquisition (M&A) occur when two or more companies joint together all or part of their operations. The differences between mergers and acquisition relate mainly to the relative size, management control and ownership of the combined business. Mergers is defined as two separate companies pooling their resources into a single entity and become common shareholders. The shareholders of pre-merger companies have a shared in the ownership of the merged…