DSST Things to know_Intro to Business

Sole proprietorship one owner most popular accounting

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Sole Proprietorship – one owner (most popular accounting for ¾ of the business organization) no paperwork to complete no special reporting to IRS run by one person o Advantages Lack of legal requirements Low start up costs No separate tax filings No need to divide profits No share in decision making o Disadvantages Major disadvantage - Unlimited liability Difficult to borrow money Responsible for all losses No share in decisions making – bounce ideas off another Business ends when owner dies/retires Partnerships– 2 types – General and Limited Partnerships All partnerships agreements be established at the beginning of the business (responsibilities and additions or departures) General- Must file information about business under Federal Revised Uniform Limited Partnership Act o Advantages Lack of separate business tax filings Easier to borrow money liability not on one person Partners can contribute to start up cost Share in profits Share in decisions o Disadvantages Unlimited liability – for own debts as well as partners Limited- Some partners are investors only and have no decision making authority Must have at least one General (or active partner) who manages the day-to-day Corporations – 6 types Private (Closely Held) – owned by family or employees, outsiders cannot buy stock – profits are taxed as corporate tax C-Corp (Publicly Held) – owned by public or employees – profits are taxed as corporate tax S-Corp (Subchapter) – share holders pay personal income on their share of any profit the business earns. S Corps DO NOT pay corporate taxes Limited Liability (LLC) – profits are taxed as personal income, no member has personal liability Professional – founded by lawyers and doctors Multinational or Transnational – operations in multiple countries and their stock is sold on multiple stock exchanges – taxes vary by country A Corporation owned by Investors, or Stockholders Governed by Board of Directors Day to Day operation overseen by officers of Corporation (CEO, COO) Is formed according to state law An entity that is separate from owners (the stockholders) Has liability separate from owners
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Must file Corporate TAX returns annually Have legal rights – to sue Has certain legal obligations such as law obedience Raises capital by selling shares in its business (unlike other forms of ownership) Limited liability for investors o Advantages Ease of obtaining capital Continuity of management Growth doesn’t depend on one person o Disadvantages Double taxation Profits are taxed as business income when paid out as dividends Stockholders must pay tax on them as personal income OSHA – Occupational Safety and Health Administration – agency in charge of setting and enforcing workplace standards, training and education Fair Labor Standards Act – regulates the minimum wage Bureau of Labor Statistics – compiles a number of economic indices to aid businesses and workers
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Sole Proprietorship one owner most popular accounting for...

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