Wgu Rlt2 Task 2

• LIABILITY – All liability rests in the sole proprietors shoulders. There is no hiding from liabilities of the company for the owner, nor is the business sheltered from liabilities of the proprietor. • INCOME TAXES – Since the owner and his/her business are one in the same, all income is then treated as personal income to the

This allows each owner to protect personal assets from claims and lawsuits against the company. This limits the liability of each owner the amount that he or she has invested in the business. The LLC also has the option to choose your own tax situation. In addition, the ruling does not affect the personal finances of the owner as a sole proprietorship.

A limited liability company consists of a single owner, or sometimes more than one owner, and are not taxed as separate business entities. All profits and losses pass through the business to those who own the company. Owners must report profits and losses on their personal tax return filing as a corporation, partnership, or sole proprietorship. If the LLC is ran by a single owner, they file a 1040 Schedule C form as a sole proprietor. Partners file a 1065 form consisting of a partnership, and a form 1120 is filed if the LLC is filing as a corporation. The LLC must be registered such as the State Corporation Commission, Department of Commerce and Consumer Affairs, Department of Consumer and Regulatory Affairs, or the Division of Corporations and Commercial Code. The great thing about an LLC is that the owner has freedom in management. The owner is able to run the organization as they see fit not answering to anyone,

Limited Liability Company (LLC) combines the tax advantages of a partnership with the limited liability aspects of a corporation. LLC’s are governed by the Uniform Limited Liability Company Act (ULLCA). All members of the LLC enjoy limited liability unless there is serious misconduct is committed by said member(s), or a member fails to follow through on an obligation. All this should be outlined in your preformation contract. You will have more flexibility with taxation and options on how to manage the company. It would be advisable to also have an Operating Agreement. This will dictate how management will be hired and fired, division of profits, how to transfer interest in the event a member chooses to opt out or dies. What steps to take in the event of dissociation of a partner, and if it causes the dissolution of the LLC. Most importantly how the members vote in the LLC. The weight of the members vote is in accordance with the member’s capital

By forming an LLC John can take advantage of deducting certain business expenses. Purchases relating to business can be written-off. By deducting these expenses, John will be able to reduce his taxable income.

The sole proprietor and the business are one in the same with regard to liability. The sole proprietorship is not recognized as a separate entity from its owner; as a consequence, the debts of the business are deemed to be the personal debts of the owner, and the sole proprietor has unlimited personal liability for all the debts, contractual obligations, and legal judgments the business incurs (Seaquist, 2012).However, just as important as the autonomy, the sole proprietorship permits the business owner freedom

LLCs provide some liability protection to their owners, who are generally not personally responsible for the business debts and liabilities of the LLC. Creditors cannot pursue the personal assets of the owners to pay

In this scenario, it seems like Jeb and Josh have a limited partnership pertaining their business. Jeb doesn’t actively participate on the day-to-day operations of the business, but he is a main financial contributor, therefore his liability with Arcadia Sports is limited and he cannot lose more than he has invested. For Josh however, being that he is the main operations manager he has unlimited personal liability, therefore, regardless of how much he has invested in the business his liability could potentially exceed that amount. I personally would have recommended Jeb and Josh to form an LLC. Although it takes a lot more time, money and effort to create this business, the amount of high risk sport activities offered by Arcadia Sport’s deems

The parties of an LLC have particular rights like voting decisions which impact the Limited Liability Company. The members of an LLC openly manage the firm and are likely to receive revenue allocations, tax remunerations as well as losses which are different from their membership interest. Members also have duties of trust which are sometimes called fiduciary duties. Several Limited Liability Companies are managed by its owners, and some are operated by managers. Members have a duty of loyalty to the entity (Fitzpatrick, 2018). Under the duty of loyalty, members have the responsibility of putting the achievement and benefits of the company above their advantages. Members ought to act honestly when dealing with the company and avoid any conflicting interests between the company goals and personal goals. A member is supposed not to take secret advantage of the business opportunities or hoard secret profits from the commercial activities of the company (Fitzpatrick, 2018). Members also have a duty of care, and they are required to act in a decent manner as well as exercise reasonable care in performing their duties. For instance, if your Limited Liability Company wants to purchase a piece of land, one is obliged to act responsibly and

After the creation of a business plan, the next step to operating a business is the selection of an appropriate business structure. Different legal forms of business ownerships affect different managerial and financial factors from the business names to the tax obligations (Gregory, n.d.). The most common forms are sole proprietorship, partnership, cooperatives, and corporations. There are different types of corporations in the business world, but the two most general corporation types are S Corporation and Limited Liability Company (LLC) (Ferrell et al., 2013). The sole proprietorship is the easiest and most basic form of business ownership. It is owned and run by one individual, which is the proprietor. The individual is entitled to all profits and is responsible for all the business’s

In response to your questions regarding the decision of changing the organization of your business, you spoke on several concerns that need to be fully addressed. At this current time Jim’s Woodworking is a sole proprietorship which right now offers no liability protection for any of Jim’s personal assets. It needs to be noted that all limited and general partnerships, while offering many very enticing benefits, have no liability protection for personal assets. In order to protect all of Jim’s personal assets the best way possible we should focus on an S Corporation as the potential form for reorganizing Jim’s business. It will not only protect Jim’s personal assets in the event the company is sued or anything bad may take place, but will also

Driven by the advantages of limited liability, today, new limited liability forms of business organizations have emerged. One of these is known as the Limited Liability Company (LLC), a hybrid entity designed to combine the tax advantages of partnership with the benefits of limited liability.

Easy Accounting, LLC is a Limited Liability Corporation (LLC), because this type of business ownership provides the advantages beyond that of a sole proprietorship; members are not held personally liable for the company’s debts or liabilities like a corporation, and at the same time not requiring a

While many companies are formed by investors, best friends, or family members it is always a good idea to register the company and make it a legal partnership. Partnership agreements serve several purposes, but mostly it will benefit all parties involved. In this scenario, assuming Chad wants equal decision making rights but not the liability of the company’s debt LLP is a good option to register the company under, also assuming that Dad wants the same for his son Chad. For instance, “In a limited partnership certain members contribute capital but have limited liability for firm debts. The most these members can lose is their investment.” Twomey, (2013). In this case Chad seems to want equal partnership because he is suggesting to his Dad to form the partnership. However, if they do move forward and form a legal partnership they should establish the company as Dad and Chad Expert Handyman Service LLC not LLP. The reason? A company that is registered under LLC have “a favorable tax ruling on this form of organization by the Internal Revenue Service” Twomey, (2013). The difference between an LLC and a corporation, is that the LLC does not pays no federal taxes on its income as an entity. However, the “income (or losses, deductions, and credits) flows through to the LLC’s owners based on their proportionate interest in the company.” Twomey, (2013). Another benefits of having the company registered as an LLC is that the Dad and Chad have limited liability for their business 's

Liability - Liability for any sole proprietorship form of business is total and unlimited. Since the business and the owner are one in the same there is the risk of being left