3-1 McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved
Welcome message from author
This document is posted to help you gain knowledge. Please leave a comment to let me know what you think about it! Share it to your friends and learn new things together.
Transcript
3-1McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved.
3-2
Forms Of OwnershipOf Small Business
Primary Legal FormsPrimary Legal Forms
Advantages & Disadvantages Advantages & Disadvantages Of Each FormOf Each Form
Other Legal FormsOther Legal Forms
Ch
apte
r
33
3-3McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved.
Right Legal Form:Right Legal Form:Business Factors To ConsiderBusiness Factors To Consider
Future SizeFuture SizeNatureNatureDesired ControlDesired ControlLegal VulnerabilityLegal VulnerabilityTax ImplicationsTax ImplicationsExpected Profit (Loss)Expected Profit (Loss)Re-investmentRe-investmentPersonal Cash NeedsPersonal Cash Needs
PhotoLink/Getty Images
3-4McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved.
Relative PositionsRelative PositionsOf Legal FormsOf Legal Forms
3-5McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved.
Legal Form By IndustryLegal Form By Industry
0%
10%
20%
30%
40%
50%
60%
70%
80%
Services Trade Construction Finance/Ins. &Real Estate
Manufacturing
Proprietorship Partnership Corporation
3-6McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved.
Legal FormLegal FormBy Industry’s ReceiptsBy Industry’s Receipts
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Services Trade Construction Finance/Ins. &Real Estate
Manufacturing
Proprietorship Partnership Corporation
3-7McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved.
Advantages/DisadvantagesAdvantages/DisadvantagesOf ProprietorshipOf Proprietorship
Insert Insert Figure 3.2Figure 3.2
3-8McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved.
PartialPartial List Of List Of FederalFederalTax Forms: Sole ProprietorshipTax Forms: Sole Proprietorship
Form 1040: Form 1040: IndividualIndividual Income Tax Income Tax ReturnReturn
Schedule C: Schedule C: BusinessBusiness Profit(Loss) Profit(Loss) Schedule SE: Self-Employment TaxSchedule SE: Self-Employment Tax Form 1040ES: Estimated Tax For Form 1040ES: Estimated Tax For
IndividualsIndividuals Form 4562: Depreciation & AmortizationForm 4562: Depreciation & Amortization Form 8829: Expenses For Business Use Form 8829: Expenses For Business Use
Of Your HomeOf Your Home Forms 941, W-2, W-3: Employment Tax Forms 941, W-2, W-3: Employment Tax
Forms Forms
3-9McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved.
Schedule CSchedule C
FrontFront
BackBack
3-10McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved.
Advantages/DisadvantagesAdvantages/DisadvantagesOf PartnershipOf Partnership
3-11McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved.
General Partnership General Partnership OperationsOperations
Uniform Partnership ActUniform Partnership ActPartners Responsible For Other Partners Responsible For Other Partners’ ActionsPartners’ ActionsLiability:Liability:
Personal Property At RiskPersonal Property At RiskAll Debts Of FirmAll Debts Of Firm
Resolve Disputes Among Resolve Disputes Among Partners(?)Partners(?)
S. Wanke/PhotoLink/Getty Images
3-12McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved.
Types Of PartnershipsTypes Of PartnershipsGeneralPartner
GeneralGeneralPartnerPartner
GeneralGeneralPartnerPartner
Partners Liable For Partners Liable For Each Others’ ActionsEach Others’ Actions
GeneralGeneralPartnerPartner
LimitedLimitedPartnerPartner
LimitedLimitedPartnerPartner
LimitedLimitedPartnerPartner
Manage With Manage With Unlimited LiabilityUnlimited Liability
Liability = Capital Liability = Capital ContributionContribution
3-13McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved.
Partnership:Partnership:Legal/Tax DocumentsLegal/Tax Documents
Articles of Co-PartnershipArticles of Co-PartnershipTax FormsTax Forms
Form 1065 K-1: Partner’s Share Form 1065 K-1: Partner’s Share Of Income, Credit, DeductionsOf Income, Credit, Deductions
Form 4562: DepreciationForm 4562: DepreciationForm 1040: Individual Income Tax ReturnForm 1040: Individual Income Tax ReturnSchedule E: Supplemental Income & LossSchedule E: Supplemental Income & LossSchedule SE: Self-Employment TaxSchedule SE: Self-Employment TaxForm 1040-ES: Estimated Tax For IndividualForm 1040-ES: Estimated Tax For Individual
3-14McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved.
Form 1065 K-1 (Pages 1 & 2)Form 1065 K-1 (Pages 1 & 2)
FrontFront
BackBack
3-15McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved.
Form 1065 K-1 (Pages 3 & 4)Form 1065 K-1 (Pages 3 & 4)
FrontFront
BackBack
3-16McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved.
Advantages/DisadvantagesAdvantages/DisadvantagesOf CorporationOf Corporation
3-17McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved.
Form 1120AForm 1120A
FrontFront
BackBack
3-18McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved.
Form 1120 (Pages 1 & 2)Form 1120 (Pages 1 & 2)
FrontFront
BackBack
3-19McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved.
Form 1120 (Page 3 & 4)Form 1120 (Page 3 & 4)
FrontFront
BackBack
3-20McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved.
Formation Of CorporationFormation Of Corporation
Articles Of Incorporation- Filed Articles Of Incorporation- Filed With StateWith State
Corporate Charter- Corporate Charter- Comes From StateComes From State
Buy-Sell Agreement- Include In Buy-Sell Agreement- Include In Articles Of IncorporationArticles Of Incorporation
3-21McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved.
Corporate GovernanceCorporate Governance
StockholdersStockholders
Board Of Board Of DirectorsDirectors
Corporate Corporate OfficersOfficers
ElectsElects
AppointsAppoints
3-22McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved.
S CorporationS CorporationExempt From Multiple TaxationExempt From Multiple TaxationLess Than 75 StockholdersLess Than 75 StockholdersOne Class Of StockOne Class Of StockNo Corporations/Partnerships Can Be No Corporations/Partnerships Can Be
StockholdersStockholdersStockholders= U.S. Citizens Or Stockholders= U.S. Citizens Or
Permanent ResidentsPermanent ResidentsEarly 1990s Lost Appeal Because Of Early 1990s Lost Appeal Because Of
Tax Law ChangeTax Law Change
TAXES
Royalty-Free/CORBIS
3-23McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved.
PartialPartial List Of List Of FederalFederalTax Forms: S CorporationTax Forms: S Corporation
Form 1120S: Income Tax Return For S Form 1120S: Income Tax Return For S CorporationCorporation
Form 1120S K-1: Shareholder’s Share Form 1120S K-1: Shareholder’s Share Of Income, Credit, DeductionsOf Income, Credit, Deductions
Form 4625: DepreciationForm 4625: DepreciationForms 941, W-2, W-3: Employment Tax Forms Forms 941, W-2, W-3: Employment Tax Forms Form 1040: Individual Income Tax ReturnForm 1040: Individual Income Tax ReturnSchedule E: Supplemental Income(Loss)Schedule E: Supplemental Income(Loss)Schedule SE: Self-Employment TaxSchedule SE: Self-Employment TaxFrom 1040ES: Estimated Tax For IndividualsFrom 1040ES: Estimated Tax For IndividualsOther Forms Other Forms
Royalty-Free/CORBIS
3-24McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved.
Limited Liability CompaniesLimited Liability Companies
Since 1977Since 1977Benefits:Benefits:
Limited LiabilityLimited LiabilityTaxed As PartnershipTaxed As Partnership
Similar To S CorporationSimilar To S CorporationOwners = MembersOwners = MembersLifespan- Determined At Lifespan- Determined At OrganizationOrganization
Emma Lee/Life File/Getty Images
3-25McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved.
Other LegalOther LegalForms Of OwnershipForms Of Ownership
Limited Liability PartnershipLimited Liability PartnershipProtects Individual PartnersProtects Individual PartnersNot Recognized By Every StateNot Recognized By Every State
Family Limited Liability Family Limited Liability PartnershipPartnershipPartners RelatedPartners RelatedAgriculture/Family FarmsAgriculture/Family Farms
Professional Service CorporationProfessional Service CorporationProvides Licensed Professional ServicesProvides Licensed Professional ServicesDoctors, Lawyers, & AccountantsDoctors, Lawyers, & Accountants
F. Schussler/PhotoLink/Getty Images
3-26McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved.
Nonprofit CorporationsNonprofit CorporationsCivic, Charitable, Educational, Civic, Charitable, Educational,
ReligiousReligiousTax ExemptTax Exempt
CooperativeCooperativeIndependent ProducersIndependent ProducersBuys/Sells For ClientsBuys/Sells For Clients
Joint VentureJoint VentureFractional OwnershipFractional Ownership
Other LegalOther LegalForms Of Ownership Forms Of Ownership
(cont’d)(cont’d)
Royalty-Free/CORBIS
3-27McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved.
Form 1120S (Page 1 & 2)Form 1120S (Page 1 & 2)
FrontFront
BackBack
3-28McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved.
Form 1120S (Page 3)Form 1120S (Page 3)
3-29McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved.
Checklist ForChecklist ForLegal Form EvaluationLegal Form Evaluation
Related Documents
