Unit 18 - Types of Clients (Includin Parterships and Co.'s)

Question 1

*Sole Propietorship - Notes

Answer 1

• Easiest business to set up

- Unlimited liability - all losses flow through to owner and may be claimed on the propietor’s tax return.

Question 2

*Partnerships and LLC’s are generally easier to form and dissolve than C Corps.

Answer 2

-

Question 3

Benefits of structuring ga business as a general partnership, LLC, or an S-Corp is no double taxation.

Answer 3

-

Question 4

A company that expects to be very profitable should form a?

Answer 4

C-Corp. Because with an LLC, Partnership, or S-Corp all earnings pass to owners…nothing can be retained.

Question 5

Which 2 business types are taxed on their income?

Answer 5

Sole Propietorship, and C-Corp. The sole prop.’s is on the owner’s personal tax return, and the corporation is on a form 1120.

Question 6

Logical choice of business structure where a large amount of capital is to be raised?

Answer 6

C-Corp

Question 7

Business Entities that have limited liability for owners as well as flow-through of income or loss

Answer 7

• Limited Partnerships
• LLC
• S-Corp
  (Sole Prop.’s and GP’s have flow-through but unlimited liability. C-Corps have limited liability but no flow-through).

Question 8

Corporations (including LLCs) survive the death of their owners (even if there is only one shareholder in an S-Corp or C-Corp, or one member of the LLC)

Answer 8

-

Question 9

Preferred choice of transferability of ownership?

Answer 9

C-Corp is preferred, but corporate form is also acceptable (selling shares is usually straight forward)