The answer is…..”it’s C omplicated” Independent legal entity owned by shareholders/stockholders The corporation is liable for its business activities, not the shareholders; i.e., the liability does not “flow through” to the shareholders Complex legal structure because of complex tax and legal requirements Used for more established, larger companies with many employees Can be public or private Unlike partnerships and sole proprietorships, corporations pay taxes directly
C Corporation – going public 1. A company decides to go public primarily for better access to capital ($). It’s easier to sell stock publicly than privately and easier access to the debt markets. Venture capitalists go public to get their money out of the company—from rags to riches 2. Begins with an IPO, or Initial Public Offering 3. Once public, regulatory filing requirements with the SEC are cumbersome and costly 4. Easier to grow the company, make acquisitions and expand ownership; ownership is liquid because stock is sold openly on an exchange 5. Underwriters (primarily investment banks) like to see revenues of $10-20 million before they will consider taking you public
2.WHO? Private equity firms and management 4.What are Institutional Investors?
Current Events (Stock market)
Limited Liability Company (LLC) 1. An attempt to combine the limited liability feature of a corporation and the tax efficiencies and flexibility of a partnership (Note: liability is limited ) 2. Owners are called “members” 3. No double taxation because only owners are taxed—not the LLC itself (no federal taxes but some states may tax the LLC) 4. “LLC” must be in the business name (“Sampson Accountants, L.L.C.”) 5. Life of the LLC is not indefinite—when one member leaves it is dissolved
S Corp vs. LLC
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- Fall '17
- Balance Sheet, Generally Accepted Accounting Principles, net fixed assets