T11F-Chp-13-1-Entity-Choice-General-2011

T11F-Chp-13-1-Entity-Choice-General-2011 -...

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1 Chapter 13 Choice of Entity- General Fall, 2009  Howard Godfrey, Ph.D., CPA UNC Charlotte Copyright © 2009, Dr. Howard Godfrey Edited November 18, 2009.  T9-Chp-13-1-Entity-Choice-General-2009
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2   Introduction Fringe Benefits Nontax Factors Social Security Taxes Sole Proprietorship Planning Commentary Partnership Formation Corporation Transfers to an Entity S Corporation Sole proprietorship Limited Liability Company Partnership Limited Liability Partnership Corporation Planning Commentary Basis Considerations General Tax Factors Sole proprietorship Incidence of Inc.Taxation Partnership Sole proprietorship Corporation Partnership Organizational Costs Corporation Accounting Periods Personal Service Corp. Accounting Methods Double Taxation Planning Commentary Employee versus Owner Summary 13. Entity-Factors/Formation
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3   Nontax Factors Sole Proprietorship Partnership Corporation S Corporation Ltd. Liability Company Ltd. Liability Partnership
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4   General Tax Factors Incidence of Income Tax Sole proprietorship Partnership Corporation Personal Service Corp.
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5 Non-Tax Factors-  choice of a form  for a business entity Is the number of owners restricted? Do owners have limited liability? Can ownership interest be freely  transferred? Do owners have a large degree of  management control? Does entity continue regardless of  ownership changes?  Is there a high cost of organizing the  entity? Does the entity have an ability to raise 
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6 Sole Proprietorship: A business owned by one individual. The owner: Has unlimited liability Can easily transfer ownership interest Has full management control The entity: Ceases to exist when ownership changes Has a low cost of formation Has a limited ability to raise capital
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7 Partnership - two or more persons engage collectively in a profit making activity. The owners: Are fully liable (except for limited partners) Cannot easily transfer ownership interest Have full management control The entity: Ceases to exist if >50% ownership changes Has a moderate cost of formation Has a good ability to raise capital
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8 Corporation: an artificial entity created under the auspices of state law. The owners: Have limited liability Can easily transfer ownership interest Have no right to direct management No limit on number of shareholders The entity: Continues to exist when ownership changes Has a relatively high cost of formation Has an excellent ability to raise capital
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9 S Corporation: a regular corporation with special tax attributes. The owners: Have limited liability Can easily transfer ownership interest Have no right to direct management Are limited to a maximum number of 100 The entity : Continues to exist when ownership changes Has a relatively high cost of formation Has an excellent ability to raise capital
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This note was uploaded on 03/09/2012 for the course ACCT 4220 taught by Professor Burton during the Spring '08 term at UNC Charlotte.

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T11F-Chp-13-1-Entity-Choice-General-2011 -...

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