07 FORMS OF BUSINESS

07 FORMS OF BUSINESS - SECTION 7 THREE LEGAL FORMS OF...

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SECTION 7: THREE LEGAL FORMS OF BUSINESS ENTERPRISE
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THREE LEGAL FORMS OF BUSINESS ENTERPRISE SOLE PROPRIETOR PARTNERSHIP CORPORATION
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DIFFERENT TREATMENT WITH RESPECT TO LIABILITY Who is liable for outstanding debts? TAXATION How are the profits taxed by the government?
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UNLIMITED LIABILITY Sole proprietors and partners Personally liable for all business debts Each partner liable for all debts BIG DISADVANTAGE
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LIMITED LIABILITY Applies to corporate stockholders You sue a corporation as a separate legal entity. Personal assets of stockholders are safe. Limits risk BIG ADVANTAGE FOR CORPORATIONS
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TAXATION OF PROFITS SOLE PROPRIETOR AND PARTNERSHIP Sales revenue – business expenses = Business profits Business profits are taxed as wage income 2005: Top marginal tax rate = approximately 35%
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CORPORATION Sales revenue – business expenses = Before tax profits Corporations pay corporate taxes on its profits Maximum corporate marginal tax rate is 35%
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Before tax profits – corporate taxes = After tax profits
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This note was uploaded on 04/07/2008 for the course ECON 0110 taught by Professor Kenkel during the Spring '08 term at Pittsburgh.

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07 FORMS OF BUSINESS - SECTION 7 THREE LEGAL FORMS OF...

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