FIN 571 Week 2

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Fin 571 Week 2 Practice Quiz 100/100

Week 2: Business Structures

FYI:  Below is an email received from one of our customers. Please use the information contained within the email as the guide for updating the week one repository.

Write an 850 to 1,000 word response to the following e-mail:

I am currently starting a business and developing my business plan. I’m in need of some advice on how to start forming my business. I am not sure exactly how it will be financed and whether or not I want to take on partners. I am interested and willing to learn the intricacies of my options to determine how to best proceed with my plan.

Please advise on what my options are, the advantages and disadvantages of each, and possible tax consequences for each scenario?

Respectfully,

  1. Q. Customer

Citation Requirements

Include only peer-reviewed scholarly references from the UOP Library. Additional valid references include course assigned textbooks, simulation materials, or materials from the researched companies. Do not reference information from non-course related web resources, or from textbooks not assigned to the course. Request permission to use non-course related references from the instructor to avoid citation-based penalties.

The expectation for assignments is that the student increases their application-based understanding of course materials. Understanding, in this case, means that students must support assignments by applying learning points based on the weekly objectives.

Format your assignment consistent with APA guidelines.


Click the Assignment Files tab to submit your assignment.

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Description

FIN 571 Week 2

Business Structure Advice

Mr. J. Q. Customer, it is a pleasure doing business with you. I have researched your concerns and found several options that are viable for you and the startup of your company. I hope you will find the following information helpful in making your decision regarding the structure of your business. We will be next to you all the time from creating a plan to advise your company how to form a business, the crucial financial choices, and finalize legal actions. Deciding which business structure is the best for organization can be difficult if you are unsure of what the type and which best is suited for your business purpose. Each of them has different legal and tax implications. The following are the business structures that you should consider. As always I am available to discuss any of these options and am looking forward to further discussions with you.

Sole Proprietorship

The first option is that of sole proprietorship. This option is the simplest business structure available. It is the least regulated form of business and with the lowest income taxes than most of the corporations (Parrino, Kidwell, & Bates, 2012). The business will be operated by yourself so that you will be in charge of the business from business liabilities, debts, and losses. The disadvantages of a sole proprietorship are that the amount of equity capital that can be invested is limited to the amount of assets owned by the individual and the individual has unlimited liability for all debt and obligations of the proprietorship (Parrino, Kidwell, & Bates, 2012). Also the owner you receive all profits made by the business, but must pay personal income taxes on all the net profits from the business. The taxes for the business are claimed on your personal income tax forms since the business does not claim separate income taxes.

 

Partnership

The next option is the structure of partnerships. Partnerships occur when two or more people join together to form a business. You have the options of two kinds of partnerships which are limited and general. The general partnership is basically the same as a sole proprietorship and the tax structure is such that all partners are responsible for the debt and liabilities of the company (Parrino, Kidwell, & Bates, 2012). One way to avoid this is to create a limited partnership. When a partner is a limited partner, they cannot be involved in the daily operations of the business and they relinquish their ability to be actively involved in managing the business. They also have limited liability regarding any debts and judgments against the business. There are some cases where one partner can be held liable for the negligent acts of another partner within the business, and creditor may pursue a partner’s personal asset as compensation for the

 

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