MBradshaw BUSN 220 Taxation.docx

MBradshaw BUSN 220 Taxation.docx - FORMS OF BUSINESS...

Info icon This preview shows pages 1–4. Sign up to view the full content.

View Full Document Right Arrow Icon
FORMS OF BUSINESS ORGANIZATIONS 1 Forms Of Business Organizations and Taxation Monique Bradshaw BUSN 220 Accounting Principles Sofoklis Hiotellis June 11, 2017
Image of page 1

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
FORMS OF BUSINESS ORGANIZATIONS & TAXATION 2 1. Sharif, Henry and Korb should start a partnership to assist them in the management of their website Development Company. Taxation of a partnership Partnership taxation in the United States of America is managed by the IRS. Partnerships are regarded as entities which flow-through. This means that their taxation is not based on the income of the partnership since partners pay taxes on the distributive share allocated to them. Members are taxed irrespective of whether funds are distributed to the owners (Bank, 2016). The taxation law allows the owners of a partnership to have an agreement over how the income will be distributed. This distributive share requires that the allocation depicts the reality which the business faces in the economic sphere of the business. Partnership income is taxed by integrating the owners of the ownership to the partnership. The partnership is required to file a form 10065 to give information which will help the IRS determine whether partners are correctly reporting their income. Partnerships also submit Schedule K-1 to state the share of each partner in the profits and the losses of the business (Willson et al. 2015). Each partner is required to put aside a certain portion of the money to pay their share of taxes. Partners who actively operate a partnership are also required to pay self- employment taxes on profits allocated to them. The self-employment taxes are filed under Schedule SE which is submitted annually as the income tax returns are being submitted. Advantages of a Partnership A partnership is an advantageous business structure for individuals who want to start a small business. A partnership has the advantage of being inexpensive to maintain and operate and
Image of page 2
FORMS OF BUSINESS ORGANIZATIONS & TAXATION 3 being easy to start. A partnership is easy to form once all the partners agree on the terms and sign the partnership contract (Sjostrom, 2016). This process of starting a partnership is usually inexpensive making it easier for business partners to spend a small portion of starting capital in forming the business. Since every partner brings their own set of skills, operating the business becomes easy due to the diversity in experience, resources, and education. This makes it easy for tasks to be divided within the partnership in accordance with the strengths and abilities of different partners. Overall, this assists a partner to record a general level of success as personal boundaries are respected, and sharing of responsibilities becomes easier (Skripak, 2016). A partnership also reduces the costs required since managers do not have to be hired. Partners can use their skills to manage different areas of the business (Skripak, 2016). A partner will also ensure that the individuals starting the business are able to pull their resources as a way of acquiring more assets for the business. Once the business is operational
Image of page 3

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Image of page 4
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern