Jaeschbacker- AC430 Assignment-Unit 2.doc

Jaeschbacker- AC430 Assignment-Unit 2.doc - Joanna...

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Joanna Aeschbacker AC 430 Assignment Unit 2 C:2-1. The different types of entities available to form a business are as follows: A. Sole Proprietorships. Sole Proprietorships are the simplest business form, they are unincorporated and they are owned by one person. Sole proprietorships are not considered a separate entity from the individual who owns it; business earnings or losses are reported along with non-business income on the individual’s personal tax return. The business earnings could put an individual in a higher or lower tax bracket depending on profits or losses. Owners are not considered to be an employee of a sole proprietorship. B. Partnerships. Partnerships are unincorporated businesses that are owned by more than one individual. There is no separate partnership tax, but a partnership does have to file a separate tax return. All Partnership profits, losses, expenses, etc. are all passed down directly to the owners and the owners must report information from their partnership return on their individual tax return, based on their percentage of ownership/investment. As with sole proprietorships, income or losses directly affect an owner’s non-business income and could provide significant tax savings or tax due. Partners are not considered to be employees of a partnership. C. Corporations. 1. C Corporations are a separate entity from its shareholders. It also has its own separate tax return and pays a separate corporate tax on its earnings. Shareholders are not taxed on earnings of the corporation unless the corporation issues dividends. Shareholders personal assets are protected from corporate obligations-limited
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This note was uploaded on 08/15/2011 for the course ACC 430 taught by Professor Dianahinton during the Spring '11 term at Kaplan University.

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Jaeschbacker- AC430 Assignment-Unit 2.doc - Joanna...

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