J11 MGT 401 - Forms of Doing Business Pt1

J11 MGT 401 - Forms of Doing Business Pt1 -...

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Forms of Doing Business Part 1 MGT 401 Prof. Salzman
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Key Issues in Selecting a Form of Doing  Business Entrepreneurs  should consider: 1.Ease  of Formation, 2.Expense  of Formation, 3.Liability  of the owner(s) for obligations of  the entity, 4.Tax  considerations, and 5.  Need and ability to raise  Capital . 2
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Primary Forms of Doing Business in the  U.S. 1. Traditional: Sole Proprietorship Partnership – General and Limited (LP) Corporation 1. Newer Forms: Limited Liability Partnership (LLP) Limited Liability Company (LLC) 3
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Disadvantages Ease and low cost of  Formation Receipt of all  Profits Control/Management Unlimited Personal Liability Raising Capital - Sources of Funds Transfer of Ownership –  including on the  death, disability, or retirement  of sole  proprietor 4
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Forming a Sole Proprietorship Not a separate “entity” from its owner (the  proprietor) May have a fictitious name – for example:   Brandon Tyler d/b/a Mr. B’s Bistro d/b/a ” or  dba  is short for “ doing business  as Generally no formal requirements for  formation –  no agreements or “creation”  documents N.Y. General Business Law § 130  –  imposes a filing requirement if doing  business under an  assumed name 5
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Forming a Sole Proprietorship  (cont.) d/b/a or Assumed Name Certificate   sole proprietorship* using a fictitious name  must file a  d/b/a  or  Assumed Name Certificate  in County Clerk’s Office(s) of county or counties  where doing business Some states (not NYS) also require publication  of notice Consequences of not filing –  misdemeanor and  cannot file lawsuit (as  ) in NYS with respect to business  done in assumed name Purpose? _____________     *If a corporation, limited partnership or limited liability  company carries on business using a fictitious name in NYS,  it must file a d/b/a or Assumed Name Certificate with the NYS  Department of State in Albany 6
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No separate entity so  no separate income  tax filing claimed on the owner’s income tax return  (usually  Schedule C ) Owner pays  self employment tax*        * At 15.3% on net earnings from self employment up to  FICA/self employment tax wage base ($106,800 for  2011) and at 2.9% on net earnings from self  employment in excess of the wage base.  (Note – this  is equivalent to the employer and employee combined  shares of FICA (social security tax)). 8
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This note was uploaded on 08/15/2011 for the course MGT 401 taught by Professor Dalton during the Spring '08 term at SUNY Buffalo.

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J11 MGT 401 - Forms of Doing Business Pt1 -...

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