Book Notes Chapter 8
Book Notes Chapter 8 BA 101
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This 4 page Class Notes was uploaded by howellkaila on Saturday March 14, 2015. The Class Notes belongs to BA 101 at University of Oregon taught by Tom Durant in Winter2015. Since its upload, it has received 74 views. For similar materials see Intro to Business in Business at University of Oregon.
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Date Created: 03/14/15
Chapter 8 Book Notes Common Considerations when Evaluating Business ownership Tax Considerations Liability Exposure StartUp and Future Capital Requirements Control Managerial Ability Business Goals Management Succession Plans Cost of Formation Organizational Forms of siness Sole Proprietorship Partnership Corporation C Corporation S Corporation Limited Liability Company Can tell the difference between these companies through the following Taxes Starting an Organization Control Liability LifeSale of Company Sole Proprietorship Simplest and most common form of business organization Advantages 0 Ease of Formation 0 Less Costly 0 Total DecisionMaking 0 Minimal Legal Restrictions 0 Ease of Discontinuing Disadvantages 0 Single Owner 0 Unlimited Liability 0 Individually Responsible for All Loses 0 Limited Skills 0 Limited Access to Money 0 Transitioning Ownership to Others If you hire employees you are legally responsible for decisions made by the employee Owner and Business are legally the same Business exists as long as owner is alive and wants to keep business going Business income is reported on individual39s tax returns Partnership Two of more people create a business and jointly own assets responsibility for liabilities and share profits and losses Advantages O Complementary Skills and Talents 0 Division of Profits 0 Larger Pool of Capitals and Attract More Partners 0 Minimal Government Regulation Disadvantages 0 Unlimited Liability in one partner 0 Challenge to get additional capital 0 Difficult to change partners 0 Personality and Authority Conflicts Standard Partnership Agreement Includes Name of Partnership Purpose Duration of Business Names of Partners Contributions of Partners How profits and losses distributed Agreement on Salaries Procedure of Expansion Absence of Partner Specify who owns and manages the business If there are limits they should be included Mutual Agency held responsible for decisions of each partner partnership can be bound legally Each partner is individually liable for obligations or partnership Lasts as long as both partners stay in partnership Files their portion of income on personal tax return Corporation Exists independently of its owners engage in business contracts can sure and be sued own property and pay taxes Most Complex to Create Articles of Incorporation Name Number of Share of Stock Number of Shares of Stock by Owner Owner39s Contribution Business of Corporation Management Structure After approval they pay fees and hold stockholders meeting where members elect board of directors Board of Directors provides guidance to the executive management Has Bylaws rules by which corporation is ran Has own record keeping system Three Categories Domestic Corporation Does business in the state it was incorporated Foreign Corporation Business was incorporated in one state but does business in another Alien Corporation Operates in a company it was not incorporated in Life of Corporation depends on Shareholders Shareholders have no liability Tvbes of Stock 0 Preferred Stock I First Claim on Profits of Company I No Voting Rights 0 Common Stock I Voting Rights 0 Stock can be purchased in Stock Market Other Forms of Business Ownership S Corporation SubChapter Corporation Small Corporation Like C Corporation Only Exist for Federal Income Tax Purposes Limit on Number of Shareholders 100 Only has one class of Stock All shareholders are US Residents and Individuals Not liable for double taxation Runs on a calender year financial basis Limited Ligbilitv Comnm Simple like a partnership but has the legal protection of a corporation At least 2 owners Limited personal liability Not subject to many restriction of S Corporation Articles of Organization 0 Name 0 Address 0 Method of Management 0 Duration 0 Names and Addresses of Owners 0 Expensive 0 Limited Life Spans ends when a partner dies