They are governed by state laws but a uniform

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Unformatted text preview: ade name. If it isn’t your own name, then you register a company name as a “Fictitious business name,” also called a DBA (“Doing Business As”). Depending on your state, you can usually obtain this through the county government. The cost is no more than a small registration fee plus a required newspaper ad, for a total of less than $100 in most states. The main disadvantage of the sole proprietorship is the lack of a separate entity, which means you have personal responsibility for it. If the business fails, then its creditors can go after your personal assets. Tax treatment is quite simple; your profit and loss goes straight through to your personal taxes. Your business income is normally on Schedule C of your tax return. This can be good or bad for your tax situation, depending on where you stand with other income. Partnerships Partnerships are harder to describe because they change so much. They are governed by state laws, but a Uniform Partnership Act has become the law in most states. That act, however, mostly sets the specific partnership agreement as the real legal core of the partnership, so the legal details can vary widely. Usually the income or loss from partnerships passes through to the partners, without any partnership tax. The agreements can define different levels of risk, which is why you’ll read about some partnerships that have general partners and limited partners, with different levels of risk for each. HURDLE: THE BOOK 4.6 ON BUSINESS PLANNING The agreement should also define: • What happens if a partner withdraws • Buy and sell arrangements for partners • Liquidation arrangements, should that becomes necessary If you think a partnership might work for your business, make sure you do this right. Find an attorney with experience in partnerships, and check for references of present and past clients. This is a complicated area and a mistake in the agreement can cause a lot of problems. Corporations Corporations are either the standard C corporation or the small business S corporation. The C corporation is the classic legal entity of the vast majority of successful companies in the United States. Mos...
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This note was uploaded on 01/26/2014 for the course BUINESS 102 taught by Professor Unknown during the Winter '09 term at University of Phoenix.

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