Lecture 6: Business Structure Flashcards
A business structure operating configuration includes there 6 things:
Legal structure Ownership Vision Mission Assumption about the behavior of the employees Business performance
Deciding your structure:
Make sure your consultants know these 2 things
Health care
State law and accounting
Deciding your structure:
You should consult with these 4 people
Lawyer
Accountant
Financial advisor
Tax advisor
Legal structure:
\_\_\_\_\_\_ proprietorship \_\_\_\_\_\_ partnership \_\_\_\_\_\_ partnership \_\_\_\_\_\_\_\_\_ (\_\_ or \_\_\_) \_\_\_\_\_\_\_ corporation \_\_\_\_\_\_ \_\_\_\_\_\_ company
Sole General Limited Corporation (C or S) Personal Limited Liability
Government does not like _____ _______
Independent contractors — tax advantages
Cannot be _______ contractor unless you fit certain criteria
Independent
What is the difference between a contractor and employee
A contractor will see a few home care patients for different organizations
An employee will treat home care patients for the same organization
Cannot be an independent contractor unless you have ________
Expertise
If you have a SET schedule that you were given, you are not a _____ _____
Independent contractor
Sole Proprietorship:
Any ___________ _____ will by default become a sole proprietorship if you do not _______ _________
Unincorporated business
Deliberately choose
Sole Proprietorship: This is a _______ position
You will be a sole proprietor if you make no other _______ to organize in any other way
Default
Attempt
Sole proprietorship is _____, no one else
SOLO
Sole Proprietorship:
You have a _____ ____ ____ instead of SSN
EIN Tax ID
Sole proprietorship characteristics:
_____ and _______ to form
Easy and inexpensive
Sole proprietorship characteristics:
Owner has ______ _____, takes all of _______
Full control
Profit
Sole proprietorship characteristics:
Tax: Business profit is the owner’s _______ ______
Personal income
Sole proprietorship characteristics:
You have unlimited ______ ________
Personal liability
Partnership:
More than _____ ______
One owner
Partnership:
______ to form
Inexpensive
Partnership:
Business profit treated as _____ _____
Personal income
Partnership: Profit is divided ______ ____ ______
Between the partners
Partnership: Pay taxes at own ____ ____, even if the tax rates are different
Tax rate
Partnership: Unlimited _____
Liability
Partnership:
If partner messes up, you are not liable for their actions (true or false)
False, you are liable!
Limited partnership:
______ partners have a financial interest in the business
They are not permitted to be involved in the ____ ____ ____ operation of the business
Silent
Day to day
Is a partnership agreement required by law?
No
Partnership agreement:
Very important to clearly define the ____ of the parters
ROLE
Partnership agreement: Clearly spells out what will happen if one partner _______ the Practice
Leaves
Partnership agreement: Sets the framework fo discussion of _______ of the practice
Aspects
Corporation:
A legal _______ of the business from its owners
Separation
Corporation: The Corp has a ____ ____ _______ that control the corporation
Board of directors
Corporation: The board appoints the _______ officers
Corporate
C-Corporation:
Legal entity separate from owners formed under ____ _____
State law
C-Corporation:
Is this expensive or inexpensive to form?
Expensive!!
Can be expensive to maintain
Corporate tax and tax on owners share (double tax)
C-Corporation:
Limits ______ _______
Personal liability
C-Corporation:
Easy to _______ ownership
Transfer
C-Corporation: Easiest to raise _____ from ______ sources
Capital
Outside
S-Corporation:
Advantages of _______ personal liability and _____ _____ tax treatment
Limited
Pass through
S-Corporation:
Shareholders are limited to ___ and must be ____ _______ or ___ ______
35
US citizens
Resident aliens
S-Corporation: What are the advantages?
Ease of transfer of business
Ease of raising capital
S-Corporation:
What is the disadvantage?
High regulation and legal restrictions
Personal Service Corporation:
For individuals who are the _______ and the _______ of the service
Must be the _____ _______
Owners and providers
Same profession
Personal Service Corporation:
States use the designation of PC for _______ ______ or SC for _______ _______
Personal corporation
Service corporation
Personal Service Corporation: All profits can be put back into the business leaving no _______ _____ to pay
Corporate tax
Personal Service Corporation:
_____ _________ etc. can be deducted
Health insruance
Personal Service Corporation:
Is it costly to form?
NO
Personal Service Corporation: Is there personal liability protection?
NO
Which legal structure is most popular?
The limited liability company
The Limited Liability Company:
The LLC has been around since _____
1988
The Limited Liability Company:
Taxed like a ________
Tax pass though, no ________ tax
Partnership
Corporate
The Limited Liability Company:
It is ________ business form regulated in every state
Unincorporated
The Limited Liability Company:
Legally it is ______ from its owners
Separate
The Limited Liability Company:
They are regulated differently in each ______
State
The Limited Liability Company:
LLC is technically not legal for ____, but ____ not excluded from literature necessarily
PTs
PTs
Tax status: list the two
For profit or not for profit
Tax status has to do with what you do with _____ once you have it
Money
Not for profit means that you need to be ______ with a certain ______ and _______
Organized
Vision and mission
How is tax status determined?
What is something that is NOT easy?
Qualifying for tax exempt status
How is tax status determined?
The __________ of the business
Does money provide the _____ to pay for care?
Is money the ____ itself?
PURPOSE
Means
Means
How is tax status determined?
How are the ______ used?
Money used to provide ____ for those that cannot pay
OR
Money _______ among the owners?
Profits
Care
Divided
For profit business:
Provides a _______ or _______ to make money for its _______
Service
Goods
Owners
For profit business:
Can be ______ or ________
Taxes are paid on the ______
Private or public
Profits
For profit business:
Remaining ______ can be distributed to the owners
Profits
For profit business:
Examples?
Private practices
Corporations
Not for profit business:
Tax _______ federal, state and local taxes
Must apply to the ____ for this status
Exempt
IRS
Not for profit business:
The business must be involved in some type of ______ ______
Community service
Not for profit business: Cannot provided financial benefit to any _____ _______ or _____ _______
Private individual
FP business
Not for profit business:
Non profits are a _______ on the community
Why?
BURDEN
Lost tax revenue
Community expenses: fire, police
What are the three types of ownership?
Public
Private
Government
Ownership:
Public?
stock is available for purchase
Ownership:
Private?
Owned by individuals, or privately held group
Ownership:
Government?
Owned by the federal, state or local government
Usually not for profit and tax exempt
The correct business structure:
Best structure must be determined based on the _______ ________
This will determine the legal structure, _____ _____ and _____ _____ of the business
Business objectives
Tax status, operating structure
