SlideShare a Scribd company logo
Business Structure
Jose Cintron, MBA-CPC
Business/Accounting Professor
Josecintron.mba@gmail.com
(954) 374-8298
www.mba4help.com
What kind of business?
www.mba4help.com
Business Structures
SOLE PROPRIETORSHIP
PARTNERSHIPS
LLC CORPORATIONS
S-CORPORTATIONS
C-CORPORATIONS
NON FOR PROFITS CORPORATIONS
www.mba4help.com
SOLE PROPRIETORSHIP
SOLE PROPRIETORSHIP
• Easy to form-Business owned by one person
• legal existence of proprietorship is extension of
proprietor
• may have any number of employees
• Unlimited liability
• Single Taxation
www.mba4help.com
Business Structures
PARTNERSHIP
• Business owned by at least two people
• may have any number of employees
• Must be in writing for more than one year
• NO double Taxation
• Unlimited Liability for all partners
www.mba4help.com
Partnership form of
organization
A partnership is an association of two or more persons to carry on as co-
owners of a business for profit.
Partnerships are fairly easy to form. People form partnerships simply by
a verbal agreement, or more formally, by written agreement.
A partnership is a legal entity. A partnership can own property
(land, buildings, equipment), and can sue or be sued. A partnership also
is an accounting entity. Thus, the personal assets, liabilities, and
transactions of the partners are excluded from the accounting records of
the partnership, just as they are in a proprietorship.
www.mba4help.com
Partnership and taxes
The net income of a partnership is not taxed as a separate entity. But, a
partnership must file an information tax return showing partnership net
income and each partner's share of that net income. Each partner's share
is taxable at personal tax rates, regardless of the amount of net income
each withdraws from the business during the year.
www.mba4help.com
Mutual Agency
Mutual agency means that each partner acts on behalf of the partnership
when engaging in partnership business. The act of any partner is binding
on all other partners. This is true even when partners act beyond the
scope of their authority, so long as the act appears to be appropriate for
the partnership.
www.mba4help.com
Limited Life
A partnership may be ended voluntarily at any time through the
acceptance of a new partner or the withdrawal of a partner. It may be
ended involuntarily by the death or incapacity of a partner. Partnership
dissolution occurs whenever a partner withdraws or a new partner is
admitted. Dissolution does not necessarily mean that the business ends.
If the continuing partners agree, operations can continue without
interruption by forming a new partnership.
www.mba4help.com
Unlimited Liability
Each partner is personally and individually liable for all partnership
liabilities. Creditors' claims attach first to partnership assets. If these are
insufficient, the claims then attach to the personal resources of any
partner, irrespective of that partner's equity in the partnership. Because
each partner is responsible for all the debts of the partnership, each
partner is said to have unlimited liability
www.mba4help.com
Co-Ownership of Property
Partners jointly own partnership assets. If the partnership is
dissolved, each partner has a claim on total assets equal to the balance in
his or her respective capital account. This claim does not attach to
specific assets that an individual partner contributed to the firm.
Similarly, if a partner invests a building in the partnership valued at
$100,000 and the building is later sold at a gain of $20,000, the partners
all share in the gain.
www.mba4help.com
Share Income or loss
Partnership net income (or net loss) is also co-owned. If the partnership
contract does not specify to the contrary, all net income or net loss is
shared equally by the partners. As you will see later, though, partners
may agree to unequal sharing of net income or net loss.
www.mba4help.com
Limited partnership
“Ltd.,” or “LP”
In a limited partnership, one or more partners have unlimited liability
and one or more partners have limited liability for the debts of the firm.
Those with unlimited liability are general partners. Those with limited
liability are limited partners. Limited partners are responsible for the
debts of the partnership up to the limit of their investment in the firm.
Limited partners does not get involved in management.
www.mba4help.com
Limited Liability Partnership
In an LLP, all partners have limited liability. No general partners.
The LLP is designed to protect innocent partners from malpractice or
negligence claims resulting from the acts of another partner.
These professional partnerships vary in size from a medical/Lawyer
partnership of three to five doctors, to 150 to 200 partners.
www.mba4help.com
One major advantage of a partnership is to combine the skills and
resources of two or more individuals.
Partnerships are easily formed and are relatively free from government
regulations and restrictions.
A partnership does not have to contend with the “red tape” that a
corporation must face.
Partners generally can make decisions quickly.
Advantages & Disadvantages
www.mba4help.com
The Partnership Agreement
Ideally, the agreement of two or more individuals to form a partnership
should be expressed in a written contract, called the partnership
agreement or articles of co-partnership. The partnership agreement
contains such basic information as the name and principal location of
the firm, the purpose of the business.
1. Names and capital contributions of partners.
2. Rights and duties of partners.
3. Basis for sharing net income or net loss.
4. Provision for withdrawals of assets.
5. Procedures for submitting disputes to arbitration.
6. Procedures for the withdrawal or addition of a partner.
7. Rights and duties of surviving partners in the event of a partner's
death.
www.mba4help.com
Partner's initial investment
Each partner's initial investment in a partnership is entered in the
partnership records. The partnership should record these investments at
the fair market value of the assets at the date of their transfer to the
partnership. All partners must agree to the values assigned.
www.mba4help.com
The partnership records
the investments
Investment of A. Rolfe
Cash 8,000
Office Equipment 4,000
A. Rolfe, Capital 12,000
(To record investment of Rolfe)
Investment of T. Shea
Cash 9,000
Accounts Receivable 4,000
Allowance for Doubtful Accounts 1,000
T. Shea, Capital 12,000
(To record investment of Shea)
www.mba4help.com
Dividing Net
Income or Net Loss
Partners equally share partnership net income or net loss unless the
partnership contract indicates otherwise. The same basis of division
usually applies to both net income and net loss. It is customary to refer to
this basis as the income ratio, the income and loss ratio, or the profit
and loss (P&L) ratio.
www.mba4help.com
LLC-Corporations
LLC-CORPORATIONS
• Hybrid for of Corporations
• One or more owners
• Owners are call members
• No double taxation
• Less paper work and regulations
• More freedom
www.mba4help.com
Limited Liability Companies
A hybrid form of business organization with certain features like a
corporation and others like a limited partnership is the limited liability
company, or “LLC.” An LLC usually has a limited life. The
owners, called members, have limited liability like owners of a
corporation. Whereas limited partners do not actively participate in the
management of a limited partnership (LP), the members of a limited
liability company (LLC) can assume an active management role.
For income tax purposes, the IRS usually classifies an LLC as a
partnership.
www.mba4help.com
www.mba4help.com
Corporations
CORPORATION
• an entity created by a state stature
• exists separately from and independently of the
owners
• may have one of more owners
• owners are called shareholders or stockholders
• ownership evidenced by stock certificate
www.mba4help.com
Corporation is created by law
A corporation is created by law, and its continued existence depends
upon the statutes of the state in which it is incorporated. As a legal
entity, a corporation has most of the rights and privileges of a person.
The major exceptions relate to privileges that only a living person can
exercise, such as the right to vote or to hold public office. A corporation
is subject to the same duties and responsibilities as a person. For
example, it must abide by the laws, and it must pay taxes.
www.mba4help.com
Publicly held and Privately
Classification by ownership distinguishes between publicly held and
privately held corporations.
Publicly held corporation may have thousands of stockholders. Its
stock is regularly traded on a national securities exchange such as the
New York Stock Exchange. Most of the largest U.S. corporations are
publicly held. Examples of publicly held corporations are
Intel, IBM, Google, and General Electric.
Privately held corporation usually has only a few stockholders, and
does not offer its stock for sale to the general public.
www.mba4help.com
Separate Legal Existence
As an entity separate and distinct from its owners, the corporation acts
under its own name rather than in the name of its stockholders. Ford
Motor Company may buy, own, and sell property. It may borrow
money, and may enter into legally binding contracts in its own name. It
may also sue or be sued, and it pays its own taxes. The acts of its owners
(stockholders) do not bind the corporation unless such owners are agents
of the corporation
www.mba4help.com
Limited Liability of
Stockholders
Corporation is a separate legal entity, creditors have recourse only to
corporate assets to satisfy their claims. The liability of stockholders is
normally limited to their investment in the corporation. Creditors have no
legal claim on the personal assets of the owners unless fraud has
occurred. Even in the event of bankruptcy, stockholders' losses are
generally limited to their capital investment in the corporation.
www.mba4help.com
Transferable Ownership Rights
Shares of capital stock give ownership in a corporation. These shares are
transferable units. Stockholders may dispose of part or all of their interest
in a corporation simply by selling their stock.
The transfer of ownership rights between stockholders normally has no
effect on the daily operating activities of the corporation.
www.mba4help.com
Ability to Acquire Capital
It is relatively easy for a corporation to obtain capital through the
issuance of stock. Investors buy stock in a corporation to earn money
over time as the share price grows, and because a stockholder has limited
liability and shares of stock are readily transferable. Also, individuals can
become stockholders by investing relatively small amounts of money. In
sum, the ability of a successful corporation to obtain capital is virtually
unlimited.
www.mba4help.com
Continuous Life
Since a corporation is a separate legal entity, its continuance as a going
concern is not affected by the withdrawal, death, or incapacity of a
stockholder, employee, or officer. As a result, a successful enterprise can
have a continuous and perpetual life.
www.mba4help.com
Corporation Management
As in Ford Motor Company, stockholders legally own the corporation.
But they manage the corporation indirectly through a board of directors
they elect. The board, in turn, formulates the operating policies for the
company. The board also selects officers, such as a president and one or
more vice presidents, to execute policy and to perform daily management
functions.
The chief executive officer (CEO) has overall responsibility for
managing the business.
www.mba4help.com
Structure
www.mba4help.com
Forming a Corporation
The initial step in forming a corporation is to file an application with the
Secretary of State in the state in which incorporation is desired. The
application contains such information as: (1) the name and purpose of the
proposed corporation; (2) amounts, kinds, and number of shares of
capital stock to be authorized; (3) the names of the incorporators; and (4)
the shares of stock to which each has subscribed.
www.mba4help.com
Advantages vs. Disadvantages
www.mba4help.com
Additional Taxes
In addition, stockholders must pay taxes on cash dividends (pro rata
distributions of net income). Thus, many argue that the government taxes
corporate income twice (double taxation)—once at the corporate
level, and again at the individual level.

More Related Content

What's hot

Entrepreneurial attitude
Entrepreneurial attitudeEntrepreneurial attitude
Entrepreneurial attitude
Khushbu Deorah
 
Chapter 4 forms of a business organisation
Chapter 4   forms of a business organisationChapter 4   forms of a business organisation
Chapter 4 forms of a business organisation
yash gupta
 
Types of meetings in companies
Types of meetings in companiesTypes of meetings in companies
Types of meetings in companies
Anandbabu V
 
Entrepreneurship
EntrepreneurshipEntrepreneurship
Entrepreneurship
Seta Wicaksana
 
Joint Stock Company formation and features
Joint Stock Company formation and featuresJoint Stock Company formation and features
Joint Stock Company formation and features
Aravindreddy Mokireddy
 
CH03 Enterprise, Business Growth and Size.pptx
CH03 Enterprise, Business Growth and Size.pptxCH03 Enterprise, Business Growth and Size.pptx
CH03 Enterprise, Business Growth and Size.pptx
AbdiFitaahMahamed
 
Legal structure of businesses
Legal structure of businessesLegal structure of businesses
Legal structure of businesses
Dulwich College Shanghai
 
3. ownership structure
3. ownership structure3. ownership structure
3. ownership structure
MRIGANKA MANDAL
 
Entrepreneurship introduction , concept , need , growth &innovation RTU btech
Entrepreneurship introduction , concept , need , growth &innovation  RTU btech Entrepreneurship introduction , concept , need , growth &innovation  RTU btech
Entrepreneurship introduction , concept , need , growth &innovation RTU btech
Ambuj Tak
 
Sole proprietorship.
Sole proprietorship.Sole proprietorship.
Sole proprietorship.
TareqAziz28
 
Introduction to small business
Introduction to small businessIntroduction to small business
Introduction to small business
Suzana Vaidya
 
Cambridge Topic 1 AS Level - Enterprise
Cambridge Topic 1 AS Level - EnterpriseCambridge Topic 1 AS Level - Enterprise
Cambridge Topic 1 AS Level - Enterprise
Eezy Champion
 
Elements of company law
Elements of company lawElements of company law
Elements of company law
Anoop Jain
 
ENTREPRENEURSHIP AND SMALL BUSINESS MANAGEMENT
ENTREPRENEURSHIP AND SMALL BUSINESS MANAGEMENTENTREPRENEURSHIP AND SMALL BUSINESS MANAGEMENT
ENTREPRENEURSHIP AND SMALL BUSINESS MANAGEMENT
Mathu Shan
 
Legal requirements
Legal requirementsLegal requirements
Legal requirements
Neelu Walia
 
Entreprenuership
EntreprenuershipEntreprenuership
Entreprenuership
Genalyn Lucero
 
IGCSE Business Studeies Unit 1 understanding business activity ppt
IGCSE Business Studeies Unit 1 understanding business activity pptIGCSE Business Studeies Unit 1 understanding business activity ppt
IGCSE Business Studeies Unit 1 understanding business activity ppt
Irshad Tunio
 
Introduction to entrepreneurship
Introduction to entrepreneurshipIntroduction to entrepreneurship
Introduction to entrepreneurship
AmandaBvera
 
Characteristics of an entrepreneur
Characteristics of an entrepreneurCharacteristics of an entrepreneur
Characteristics of an entrepreneur
Brien Naco
 
Entrepreneurship notes
Entrepreneurship notesEntrepreneurship notes
Entrepreneurship notes
Shristi Gupta
 

What's hot (20)

Entrepreneurial attitude
Entrepreneurial attitudeEntrepreneurial attitude
Entrepreneurial attitude
 
Chapter 4 forms of a business organisation
Chapter 4   forms of a business organisationChapter 4   forms of a business organisation
Chapter 4 forms of a business organisation
 
Types of meetings in companies
Types of meetings in companiesTypes of meetings in companies
Types of meetings in companies
 
Entrepreneurship
EntrepreneurshipEntrepreneurship
Entrepreneurship
 
Joint Stock Company formation and features
Joint Stock Company formation and featuresJoint Stock Company formation and features
Joint Stock Company formation and features
 
CH03 Enterprise, Business Growth and Size.pptx
CH03 Enterprise, Business Growth and Size.pptxCH03 Enterprise, Business Growth and Size.pptx
CH03 Enterprise, Business Growth and Size.pptx
 
Legal structure of businesses
Legal structure of businessesLegal structure of businesses
Legal structure of businesses
 
3. ownership structure
3. ownership structure3. ownership structure
3. ownership structure
 
Entrepreneurship introduction , concept , need , growth &innovation RTU btech
Entrepreneurship introduction , concept , need , growth &innovation  RTU btech Entrepreneurship introduction , concept , need , growth &innovation  RTU btech
Entrepreneurship introduction , concept , need , growth &innovation RTU btech
 
Sole proprietorship.
Sole proprietorship.Sole proprietorship.
Sole proprietorship.
 
Introduction to small business
Introduction to small businessIntroduction to small business
Introduction to small business
 
Cambridge Topic 1 AS Level - Enterprise
Cambridge Topic 1 AS Level - EnterpriseCambridge Topic 1 AS Level - Enterprise
Cambridge Topic 1 AS Level - Enterprise
 
Elements of company law
Elements of company lawElements of company law
Elements of company law
 
ENTREPRENEURSHIP AND SMALL BUSINESS MANAGEMENT
ENTREPRENEURSHIP AND SMALL BUSINESS MANAGEMENTENTREPRENEURSHIP AND SMALL BUSINESS MANAGEMENT
ENTREPRENEURSHIP AND SMALL BUSINESS MANAGEMENT
 
Legal requirements
Legal requirementsLegal requirements
Legal requirements
 
Entreprenuership
EntreprenuershipEntreprenuership
Entreprenuership
 
IGCSE Business Studeies Unit 1 understanding business activity ppt
IGCSE Business Studeies Unit 1 understanding business activity pptIGCSE Business Studeies Unit 1 understanding business activity ppt
IGCSE Business Studeies Unit 1 understanding business activity ppt
 
Introduction to entrepreneurship
Introduction to entrepreneurshipIntroduction to entrepreneurship
Introduction to entrepreneurship
 
Characteristics of an entrepreneur
Characteristics of an entrepreneurCharacteristics of an entrepreneur
Characteristics of an entrepreneur
 
Entrepreneurship notes
Entrepreneurship notesEntrepreneurship notes
Entrepreneurship notes
 

Viewers also liked

Business plan 1
Business plan 1Business plan 1
LP Introduction
LP IntroductionLP Introduction
LP Introduction
rennis
 
Urgent care
Urgent careUrgent care
Urgent care
Curtis Bernstein
 
Cross-Sector Partnerships 101: Structuring Your Cross-Sector Partnership So I...
Cross-Sector Partnerships 101: Structuring Your Cross-Sector Partnership So I...Cross-Sector Partnerships 101: Structuring Your Cross-Sector Partnership So I...
Cross-Sector Partnerships 101: Structuring Your Cross-Sector Partnership So I...
Living Cities
 
How to Structure your startup?
How to Structure your startup?How to Structure your startup?
How to Structure your startup?
The Hub Singapore
 
Healthcare Business Survival Through Restructuring
Healthcare Business Survival Through RestructuringHealthcare Business Survival Through Restructuring
Healthcare Business Survival Through Restructuring
Elijah Ezendu
 
Basic concepts on the management of a physical therapy service organization
Basic concepts on the management of a physical therapy service organizationBasic concepts on the management of a physical therapy service organization
Basic concepts on the management of a physical therapy service organization
Juanito 'Jiggs' Lim III
 
Sustaining Harmony in Workplace the New Frontiers
Sustaining Harmony in Workplace the New FrontiersSustaining Harmony in Workplace the New Frontiers
Sustaining Harmony in Workplace the New Frontiers
Elijah Ezendu
 
Evolution in Health Care Delivery- Urgent Care Centers PPP
Evolution in Health Care Delivery- Urgent Care Centers PPPEvolution in Health Care Delivery- Urgent Care Centers PPP
Evolution in Health Care Delivery- Urgent Care Centers PPP
Debbie Fernando
 
Real Estate Joint Venture Partnerships Basics
Real Estate Joint Venture Partnerships BasicsReal Estate Joint Venture Partnerships Basics
Real Estate Joint Venture Partnerships Basics
Real Estate Financial Modeling
 
Audit process
Audit processAudit process
Terms of a GP/LP Fund Structure
Terms of a GP/LP Fund StructureTerms of a GP/LP Fund Structure
Terms of a GP/LP Fund Structure
Robert Carroll
 
Private Equity Waterfall Notes
Private Equity Waterfall NotesPrivate Equity Waterfall Notes
Private Equity Waterfall Notes
Ashley Larson
 
Structuring and Financing a Partner Buyout
Structuring and Financing a Partner BuyoutStructuring and Financing a Partner Buyout
Structuring and Financing a Partner Buyout
Greg Tobben
 
Out patient services
Out patient servicesOut patient services
Out patient services
Nc Das
 
Organizational Structures
Organizational StructuresOrganizational Structures
Organizational Structures
Dr. Vickram Aadityaa
 
Organizational Structure and Design - A case for a mid-sized Hospital
Organizational Structure and Design - A case for a mid-sized HospitalOrganizational Structure and Design - A case for a mid-sized Hospital
Organizational Structure and Design - A case for a mid-sized Hospital
Sarang Bhutada
 
Organizational Structure
Organizational StructureOrganizational Structure
Organizational Structure
ahmad bassiouny
 
Audit Process, Audit Procedures, Audit Planning, Auditing
Audit Process, Audit Procedures, Audit Planning, AuditingAudit Process, Audit Procedures, Audit Planning, Auditing
Audit Process, Audit Procedures, Audit Planning, Auditing
Advance Business Consulting
 

Viewers also liked (19)

Business plan 1
Business plan 1Business plan 1
Business plan 1
 
LP Introduction
LP IntroductionLP Introduction
LP Introduction
 
Urgent care
Urgent careUrgent care
Urgent care
 
Cross-Sector Partnerships 101: Structuring Your Cross-Sector Partnership So I...
Cross-Sector Partnerships 101: Structuring Your Cross-Sector Partnership So I...Cross-Sector Partnerships 101: Structuring Your Cross-Sector Partnership So I...
Cross-Sector Partnerships 101: Structuring Your Cross-Sector Partnership So I...
 
How to Structure your startup?
How to Structure your startup?How to Structure your startup?
How to Structure your startup?
 
Healthcare Business Survival Through Restructuring
Healthcare Business Survival Through RestructuringHealthcare Business Survival Through Restructuring
Healthcare Business Survival Through Restructuring
 
Basic concepts on the management of a physical therapy service organization
Basic concepts on the management of a physical therapy service organizationBasic concepts on the management of a physical therapy service organization
Basic concepts on the management of a physical therapy service organization
 
Sustaining Harmony in Workplace the New Frontiers
Sustaining Harmony in Workplace the New FrontiersSustaining Harmony in Workplace the New Frontiers
Sustaining Harmony in Workplace the New Frontiers
 
Evolution in Health Care Delivery- Urgent Care Centers PPP
Evolution in Health Care Delivery- Urgent Care Centers PPPEvolution in Health Care Delivery- Urgent Care Centers PPP
Evolution in Health Care Delivery- Urgent Care Centers PPP
 
Real Estate Joint Venture Partnerships Basics
Real Estate Joint Venture Partnerships BasicsReal Estate Joint Venture Partnerships Basics
Real Estate Joint Venture Partnerships Basics
 
Audit process
Audit processAudit process
Audit process
 
Terms of a GP/LP Fund Structure
Terms of a GP/LP Fund StructureTerms of a GP/LP Fund Structure
Terms of a GP/LP Fund Structure
 
Private Equity Waterfall Notes
Private Equity Waterfall NotesPrivate Equity Waterfall Notes
Private Equity Waterfall Notes
 
Structuring and Financing a Partner Buyout
Structuring and Financing a Partner BuyoutStructuring and Financing a Partner Buyout
Structuring and Financing a Partner Buyout
 
Out patient services
Out patient servicesOut patient services
Out patient services
 
Organizational Structures
Organizational StructuresOrganizational Structures
Organizational Structures
 
Organizational Structure and Design - A case for a mid-sized Hospital
Organizational Structure and Design - A case for a mid-sized HospitalOrganizational Structure and Design - A case for a mid-sized Hospital
Organizational Structure and Design - A case for a mid-sized Hospital
 
Organizational Structure
Organizational StructureOrganizational Structure
Organizational Structure
 
Audit Process, Audit Procedures, Audit Planning, Auditing
Audit Process, Audit Procedures, Audit Planning, AuditingAudit Process, Audit Procedures, Audit Planning, Auditing
Audit Process, Audit Procedures, Audit Planning, Auditing
 

Similar to Business structure 1

Business Structure
Business StructureBusiness Structure
Business Structure
Jose Cintron
 
Appg g01 g20
Appg g01 g20Appg g01 g20
Appg g01 g20
ehab ghazala
 
EGV - Legal structures - Lecture 1 & 2
EGV - Legal structures - Lecture 1 & 2EGV - Legal structures - Lecture 1 & 2
EGV - Legal structures - Lecture 1 & 2
Rohan Saraf
 
Chapter 10 and 12
Chapter 10 and 12Chapter 10 and 12
Chapter 10 and 12
Jleeser
 
Summer 15 introduction to business lecture 2_part 2
Summer 15 introduction to business lecture 2_part 2Summer 15 introduction to business lecture 2_part 2
Summer 15 introduction to business lecture 2_part 2
sakib ahmed
 
Pillay Ronal Anthony Roll no;79 assignment 1.pdf
Pillay Ronal Anthony Roll no;79 assignment 1.pdfPillay Ronal Anthony Roll no;79 assignment 1.pdf
Pillay Ronal Anthony Roll no;79 assignment 1.pdf
fiweif
 
Chapter 10 and 12 Presentation
Chapter 10 and 12 PresentationChapter 10 and 12 Presentation
Chapter 10 and 12 Presentation
Jleeser
 
Post your response to the following focus questionsDescribe a sol.pdf
Post your response to the following focus questionsDescribe a sol.pdfPost your response to the following focus questionsDescribe a sol.pdf
Post your response to the following focus questionsDescribe a sol.pdf
footsmart1
 
partnership.pptx
partnership.pptxpartnership.pptx
partnership.pptx
KriteshPatel6
 
Corporate Entities.pptx
Corporate Entities.pptxCorporate Entities.pptx
Difference between jsc and partnership
Difference between jsc and partnershipDifference between jsc and partnership
Difference between jsc and partnership
PROF. PUTTU GURU PRASAD
 
CONVERSION OF PARTNERSHIP FIRM INTO LLP
CONVERSION OF PARTNERSHIP FIRM INTO LLPCONVERSION OF PARTNERSHIP FIRM INTO LLP
CONVERSION OF PARTNERSHIP FIRM INTO LLP
ANMOL GULATI
 
Partnership
PartnershipPartnership
Partnership
cooldeep22
 
What are the different Legal entities under which business can be carried on ...
What are the different Legal entities under which business can be carried on ...What are the different Legal entities under which business can be carried on ...
What are the different Legal entities under which business can be carried on ...
Kronus Law Associates
 
Basics of business
Basics of businessBasics of business
Basics of business
NavikaJoshi
 
Business_Law_and_Legal_issues_in_tourism_Chapter3.pptx
Business_Law_and_Legal_issues_in_tourism_Chapter3.pptxBusiness_Law_and_Legal_issues_in_tourism_Chapter3.pptx
Business_Law_and_Legal_issues_in_tourism_Chapter3.pptx
IqbalHossainSajib
 
Forms of Business Ownership
Forms of Business OwnershipForms of Business Ownership
Forms of Business Ownership
dalekenneth
 
CHAPTER 4 -TYPES OF BUSINESS.pptx
CHAPTER 4 -TYPES OF BUSINESS.pptxCHAPTER 4 -TYPES OF BUSINESS.pptx
CHAPTER 4 -TYPES OF BUSINESS.pptx
HaritikaChhatwal1
 
CHAPTER 2.pptx
CHAPTER 2.pptxCHAPTER 2.pptx
CHAPTER 2.pptx
kiran arif
 
LLpicult to decide the right incorporation
 LLpicult to decide the right incorporation LLpicult to decide the right incorporation
LLpicult to decide the right incorporation
Accuprosys
 

Similar to Business structure 1 (20)

Business Structure
Business StructureBusiness Structure
Business Structure
 
Appg g01 g20
Appg g01 g20Appg g01 g20
Appg g01 g20
 
EGV - Legal structures - Lecture 1 & 2
EGV - Legal structures - Lecture 1 & 2EGV - Legal structures - Lecture 1 & 2
EGV - Legal structures - Lecture 1 & 2
 
Chapter 10 and 12
Chapter 10 and 12Chapter 10 and 12
Chapter 10 and 12
 
Summer 15 introduction to business lecture 2_part 2
Summer 15 introduction to business lecture 2_part 2Summer 15 introduction to business lecture 2_part 2
Summer 15 introduction to business lecture 2_part 2
 
Pillay Ronal Anthony Roll no;79 assignment 1.pdf
Pillay Ronal Anthony Roll no;79 assignment 1.pdfPillay Ronal Anthony Roll no;79 assignment 1.pdf
Pillay Ronal Anthony Roll no;79 assignment 1.pdf
 
Chapter 10 and 12 Presentation
Chapter 10 and 12 PresentationChapter 10 and 12 Presentation
Chapter 10 and 12 Presentation
 
Post your response to the following focus questionsDescribe a sol.pdf
Post your response to the following focus questionsDescribe a sol.pdfPost your response to the following focus questionsDescribe a sol.pdf
Post your response to the following focus questionsDescribe a sol.pdf
 
partnership.pptx
partnership.pptxpartnership.pptx
partnership.pptx
 
Corporate Entities.pptx
Corporate Entities.pptxCorporate Entities.pptx
Corporate Entities.pptx
 
Difference between jsc and partnership
Difference between jsc and partnershipDifference between jsc and partnership
Difference between jsc and partnership
 
CONVERSION OF PARTNERSHIP FIRM INTO LLP
CONVERSION OF PARTNERSHIP FIRM INTO LLPCONVERSION OF PARTNERSHIP FIRM INTO LLP
CONVERSION OF PARTNERSHIP FIRM INTO LLP
 
Partnership
PartnershipPartnership
Partnership
 
What are the different Legal entities under which business can be carried on ...
What are the different Legal entities under which business can be carried on ...What are the different Legal entities under which business can be carried on ...
What are the different Legal entities under which business can be carried on ...
 
Basics of business
Basics of businessBasics of business
Basics of business
 
Business_Law_and_Legal_issues_in_tourism_Chapter3.pptx
Business_Law_and_Legal_issues_in_tourism_Chapter3.pptxBusiness_Law_and_Legal_issues_in_tourism_Chapter3.pptx
Business_Law_and_Legal_issues_in_tourism_Chapter3.pptx
 
Forms of Business Ownership
Forms of Business OwnershipForms of Business Ownership
Forms of Business Ownership
 
CHAPTER 4 -TYPES OF BUSINESS.pptx
CHAPTER 4 -TYPES OF BUSINESS.pptxCHAPTER 4 -TYPES OF BUSINESS.pptx
CHAPTER 4 -TYPES OF BUSINESS.pptx
 
CHAPTER 2.pptx
CHAPTER 2.pptxCHAPTER 2.pptx
CHAPTER 2.pptx
 
LLpicult to decide the right incorporation
 LLpicult to decide the right incorporation LLpicult to decide the right incorporation
LLpicult to decide the right incorporation
 

More from Advance Business Consulting

International Accounting
International Accounting International Accounting
International Accounting
Advance Business Consulting
 
Accounting 500 1
Accounting 500  1Accounting 500  1
Accounting 500 1
Advance Business Consulting
 
Accounting 500-2
Accounting 500-2Accounting 500-2
Accounting 500-2
Advance Business Consulting
 
Accounting principles 1A
Accounting principles 1AAccounting principles 1A
Accounting principles 1A
Advance Business Consulting
 
Accounting principles 1B
Accounting principles 1BAccounting principles 1B
Accounting principles 1B
Advance Business Consulting
 
Accounting principles 1C
Accounting principles 1CAccounting principles 1C
Accounting principles 1C
Advance Business Consulting
 
Accounting principles 1D
Accounting principles 1DAccounting principles 1D
Accounting principles 1D
Advance Business Consulting
 
Accounting principles 1E
Accounting principles 1EAccounting principles 1E
Accounting principles 1E
Advance Business Consulting
 
CPA's Social Media Marketing
CPA's Social Media MarketingCPA's Social Media Marketing
CPA's Social Media Marketing
Advance Business Consulting
 
Search Engine Optimization-SEO
Search Engine Optimization-SEOSearch Engine Optimization-SEO
Search Engine Optimization-SEO
Advance Business Consulting
 
Accounting Principles 2a Partnership
Accounting Principles 2a PartnershipAccounting Principles 2a Partnership
Accounting Principles 2a Partnership
Advance Business Consulting
 
Accounting Principles-2b Corporations
Accounting Principles-2b CorporationsAccounting Principles-2b Corporations
Accounting Principles-2b Corporations
Advance Business Consulting
 
BUSINESS PLAN FOR SUCCESS
BUSINESS PLAN FOR SUCCESSBUSINESS PLAN FOR SUCCESS
BUSINESS PLAN FOR SUCCESS
Advance Business Consulting
 
Intangible Assets, Patents, Copyrights
Intangible Assets, Patents, CopyrightsIntangible Assets, Patents, Copyrights
Intangible Assets, Patents, Copyrights
Advance Business Consulting
 
Plant assets disposal
Plant assets disposalPlant assets disposal
Plant assets disposal
Advance Business Consulting
 
Depreciation- depreciation methods, Income Taxes
Depreciation- depreciation methods, Income TaxesDepreciation- depreciation methods, Income Taxes
Depreciation- depreciation methods, Income Taxes
Advance Business Consulting
 
Plant Assets-Property Plan
Plant Assets-Property Plan Plant Assets-Property Plan
Plant Assets-Property Plan
Advance Business Consulting
 
Business plan
Business plan Business plan
Social Media for Business Marketing
Social Media for Business MarketingSocial Media for Business Marketing
Social Media for Business Marketing
Advance Business Consulting
 
Statistic for Business
Statistic for BusinessStatistic for Business
Statistic for Business
Advance Business Consulting
 

More from Advance Business Consulting (20)

International Accounting
International Accounting International Accounting
International Accounting
 
Accounting 500 1
Accounting 500  1Accounting 500  1
Accounting 500 1
 
Accounting 500-2
Accounting 500-2Accounting 500-2
Accounting 500-2
 
Accounting principles 1A
Accounting principles 1AAccounting principles 1A
Accounting principles 1A
 
Accounting principles 1B
Accounting principles 1BAccounting principles 1B
Accounting principles 1B
 
Accounting principles 1C
Accounting principles 1CAccounting principles 1C
Accounting principles 1C
 
Accounting principles 1D
Accounting principles 1DAccounting principles 1D
Accounting principles 1D
 
Accounting principles 1E
Accounting principles 1EAccounting principles 1E
Accounting principles 1E
 
CPA's Social Media Marketing
CPA's Social Media MarketingCPA's Social Media Marketing
CPA's Social Media Marketing
 
Search Engine Optimization-SEO
Search Engine Optimization-SEOSearch Engine Optimization-SEO
Search Engine Optimization-SEO
 
Accounting Principles 2a Partnership
Accounting Principles 2a PartnershipAccounting Principles 2a Partnership
Accounting Principles 2a Partnership
 
Accounting Principles-2b Corporations
Accounting Principles-2b CorporationsAccounting Principles-2b Corporations
Accounting Principles-2b Corporations
 
BUSINESS PLAN FOR SUCCESS
BUSINESS PLAN FOR SUCCESSBUSINESS PLAN FOR SUCCESS
BUSINESS PLAN FOR SUCCESS
 
Intangible Assets, Patents, Copyrights
Intangible Assets, Patents, CopyrightsIntangible Assets, Patents, Copyrights
Intangible Assets, Patents, Copyrights
 
Plant assets disposal
Plant assets disposalPlant assets disposal
Plant assets disposal
 
Depreciation- depreciation methods, Income Taxes
Depreciation- depreciation methods, Income TaxesDepreciation- depreciation methods, Income Taxes
Depreciation- depreciation methods, Income Taxes
 
Plant Assets-Property Plan
Plant Assets-Property Plan Plant Assets-Property Plan
Plant Assets-Property Plan
 
Business plan
Business plan Business plan
Business plan
 
Social Media for Business Marketing
Social Media for Business MarketingSocial Media for Business Marketing
Social Media for Business Marketing
 
Statistic for Business
Statistic for BusinessStatistic for Business
Statistic for Business
 

Recently uploaded

Zodiac Signs and Fashion: Dressing to Suit Your Astrological Style
Zodiac Signs and Fashion: Dressing to Suit Your Astrological StyleZodiac Signs and Fashion: Dressing to Suit Your Astrological Style
Zodiac Signs and Fashion: Dressing to Suit Your Astrological Style
my Pandit
 
Business Model Canvas for Successful Business
Business Model Canvas for Successful BusinessBusiness Model Canvas for Successful Business
Business Model Canvas for Successful Business
SuganthiPrakash1
 
Restaurant Chiraz Sindbad Hotel Hammamet
Restaurant Chiraz Sindbad Hotel HammametRestaurant Chiraz Sindbad Hotel Hammamet
Restaurant Chiraz Sindbad Hotel Hammamet
rihabkorbi24
 
STRATEGY TO OVERCOME CURRENT PROBLEMS AT MTC.pptx
STRATEGY TO OVERCOME CURRENT PROBLEMS AT MTC.pptxSTRATEGY TO OVERCOME CURRENT PROBLEMS AT MTC.pptx
STRATEGY TO OVERCOME CURRENT PROBLEMS AT MTC.pptx
ImranTabish1
 
10 Barriers to Effective Communications.
10 Barriers to Effective Communications.10 Barriers to Effective Communications.
10 Barriers to Effective Communications.
Cora335316
 
A Complete Guide of Dubai Freelance Visa and Permit in 2024
A Complete Guide of Dubai Freelance Visa and Permit in 2024A Complete Guide of Dubai Freelance Visa and Permit in 2024
A Complete Guide of Dubai Freelance Visa and Permit in 2024
Dubiz
 
Qatar Airways Kuwait Office.pdf.........
Qatar Airways Kuwait Office.pdf.........Qatar Airways Kuwait Office.pdf.........
Qatar Airways Kuwait Office.pdf.........
anissageorge9890
 
Millionaire track government application
Millionaire track government applicationMillionaire track government application
Millionaire track government application
pragyasharma659549
 
Gym business MODEL .pdf .
Gym business MODEL .pdf                 .Gym business MODEL .pdf                 .
Gym business MODEL .pdf .
Divyanshu56740
 
Why is Structural Engineering Critical in Disaster Preparedness and Resilienc...
Why is Structural Engineering Critical in Disaster Preparedness and Resilienc...Why is Structural Engineering Critical in Disaster Preparedness and Resilienc...
Why is Structural Engineering Critical in Disaster Preparedness and Resilienc...
grouphirani24
 
How to buy a fake Keiser University diploma
How to buy a fake Keiser University diplomaHow to buy a fake Keiser University diploma
How to buy a fake Keiser University diploma
College diploma
 
Girls Call Kharghar 9910780858 Provide Best And Top Girl Service And No1 in City
Girls Call Kharghar 9910780858 Provide Best And Top Girl Service And No1 in CityGirls Call Kharghar 9910780858 Provide Best And Top Girl Service And No1 in City
Girls Call Kharghar 9910780858 Provide Best And Top Girl Service And No1 in City
maigasapphire
 
Virtual Production Tool Set and Technologies Redefining Cinema.pdf
Virtual Production Tool Set and Technologies Redefining Cinema.pdfVirtual Production Tool Set and Technologies Redefining Cinema.pdf
Virtual Production Tool Set and Technologies Redefining Cinema.pdf
virtualproduction38
 
21stcenturyskillsframeworkfinalpresentation2-240509214747-71edb7ee.pdf
21stcenturyskillsframeworkfinalpresentation2-240509214747-71edb7ee.pdf21stcenturyskillsframeworkfinalpresentation2-240509214747-71edb7ee.pdf
21stcenturyskillsframeworkfinalpresentation2-240509214747-71edb7ee.pdf
emmanuelpulido003
 
ShotOniPhone campaign by Vancy macwan.pptx
ShotOniPhone campaign by Vancy macwan.pptxShotOniPhone campaign by Vancy macwan.pptx
ShotOniPhone campaign by Vancy macwan.pptx
macwanvancy
 
How Do Flange Adapters Work and Why Are They Essential?
How Do Flange Adapters Work and Why Are They Essential?How Do Flange Adapters Work and Why Are They Essential?
How Do Flange Adapters Work and Why Are They Essential?
Texas Flange
 
Corporate Governance for South African Mining Companies
Corporate Governance for South African Mining CompaniesCorporate Governance for South African Mining Companies
Corporate Governance for South African Mining Companies
James AH Campbell
 
Test Bank For Principles Of Cost Accounting, 17th Edition Edward J. Vander...
Test Bank For Principles Of Cost Accounting, 	  17th Edition Edward J. Vander...Test Bank For Principles Of Cost Accounting, 	  17th Edition Edward J. Vander...
Test Bank For Principles Of Cost Accounting, 17th Edition Edward J. Vander...
kevinkariuki227
 
Luxury Lifestyle Summit 2024 - Sponsorship
Luxury Lifestyle Summit 2024 - SponsorshipLuxury Lifestyle Summit 2024 - Sponsorship
Luxury Lifestyle Summit 2024 - Sponsorship
uitdiedosfinance
 
TALENT ACQUISITION AND MANAGEMENT LECTURE 5
TALENT ACQUISITION AND MANAGEMENT LECTURE 5TALENT ACQUISITION AND MANAGEMENT LECTURE 5
TALENT ACQUISITION AND MANAGEMENT LECTURE 5
projectseasy
 

Recently uploaded (20)

Zodiac Signs and Fashion: Dressing to Suit Your Astrological Style
Zodiac Signs and Fashion: Dressing to Suit Your Astrological StyleZodiac Signs and Fashion: Dressing to Suit Your Astrological Style
Zodiac Signs and Fashion: Dressing to Suit Your Astrological Style
 
Business Model Canvas for Successful Business
Business Model Canvas for Successful BusinessBusiness Model Canvas for Successful Business
Business Model Canvas for Successful Business
 
Restaurant Chiraz Sindbad Hotel Hammamet
Restaurant Chiraz Sindbad Hotel HammametRestaurant Chiraz Sindbad Hotel Hammamet
Restaurant Chiraz Sindbad Hotel Hammamet
 
STRATEGY TO OVERCOME CURRENT PROBLEMS AT MTC.pptx
STRATEGY TO OVERCOME CURRENT PROBLEMS AT MTC.pptxSTRATEGY TO OVERCOME CURRENT PROBLEMS AT MTC.pptx
STRATEGY TO OVERCOME CURRENT PROBLEMS AT MTC.pptx
 
10 Barriers to Effective Communications.
10 Barriers to Effective Communications.10 Barriers to Effective Communications.
10 Barriers to Effective Communications.
 
A Complete Guide of Dubai Freelance Visa and Permit in 2024
A Complete Guide of Dubai Freelance Visa and Permit in 2024A Complete Guide of Dubai Freelance Visa and Permit in 2024
A Complete Guide of Dubai Freelance Visa and Permit in 2024
 
Qatar Airways Kuwait Office.pdf.........
Qatar Airways Kuwait Office.pdf.........Qatar Airways Kuwait Office.pdf.........
Qatar Airways Kuwait Office.pdf.........
 
Millionaire track government application
Millionaire track government applicationMillionaire track government application
Millionaire track government application
 
Gym business MODEL .pdf .
Gym business MODEL .pdf                 .Gym business MODEL .pdf                 .
Gym business MODEL .pdf .
 
Why is Structural Engineering Critical in Disaster Preparedness and Resilienc...
Why is Structural Engineering Critical in Disaster Preparedness and Resilienc...Why is Structural Engineering Critical in Disaster Preparedness and Resilienc...
Why is Structural Engineering Critical in Disaster Preparedness and Resilienc...
 
How to buy a fake Keiser University diploma
How to buy a fake Keiser University diplomaHow to buy a fake Keiser University diploma
How to buy a fake Keiser University diploma
 
Girls Call Kharghar 9910780858 Provide Best And Top Girl Service And No1 in City
Girls Call Kharghar 9910780858 Provide Best And Top Girl Service And No1 in CityGirls Call Kharghar 9910780858 Provide Best And Top Girl Service And No1 in City
Girls Call Kharghar 9910780858 Provide Best And Top Girl Service And No1 in City
 
Virtual Production Tool Set and Technologies Redefining Cinema.pdf
Virtual Production Tool Set and Technologies Redefining Cinema.pdfVirtual Production Tool Set and Technologies Redefining Cinema.pdf
Virtual Production Tool Set and Technologies Redefining Cinema.pdf
 
21stcenturyskillsframeworkfinalpresentation2-240509214747-71edb7ee.pdf
21stcenturyskillsframeworkfinalpresentation2-240509214747-71edb7ee.pdf21stcenturyskillsframeworkfinalpresentation2-240509214747-71edb7ee.pdf
21stcenturyskillsframeworkfinalpresentation2-240509214747-71edb7ee.pdf
 
ShotOniPhone campaign by Vancy macwan.pptx
ShotOniPhone campaign by Vancy macwan.pptxShotOniPhone campaign by Vancy macwan.pptx
ShotOniPhone campaign by Vancy macwan.pptx
 
How Do Flange Adapters Work and Why Are They Essential?
How Do Flange Adapters Work and Why Are They Essential?How Do Flange Adapters Work and Why Are They Essential?
How Do Flange Adapters Work and Why Are They Essential?
 
Corporate Governance for South African Mining Companies
Corporate Governance for South African Mining CompaniesCorporate Governance for South African Mining Companies
Corporate Governance for South African Mining Companies
 
Test Bank For Principles Of Cost Accounting, 17th Edition Edward J. Vander...
Test Bank For Principles Of Cost Accounting, 	  17th Edition Edward J. Vander...Test Bank For Principles Of Cost Accounting, 	  17th Edition Edward J. Vander...
Test Bank For Principles Of Cost Accounting, 17th Edition Edward J. Vander...
 
Luxury Lifestyle Summit 2024 - Sponsorship
Luxury Lifestyle Summit 2024 - SponsorshipLuxury Lifestyle Summit 2024 - Sponsorship
Luxury Lifestyle Summit 2024 - Sponsorship
 
TALENT ACQUISITION AND MANAGEMENT LECTURE 5
TALENT ACQUISITION AND MANAGEMENT LECTURE 5TALENT ACQUISITION AND MANAGEMENT LECTURE 5
TALENT ACQUISITION AND MANAGEMENT LECTURE 5
 

Business structure 1

  • 1. Business Structure Jose Cintron, MBA-CPC Business/Accounting Professor Josecintron.mba@gmail.com (954) 374-8298
  • 3. www.mba4help.com Business Structures SOLE PROPRIETORSHIP PARTNERSHIPS LLC CORPORATIONS S-CORPORTATIONS C-CORPORATIONS NON FOR PROFITS CORPORATIONS
  • 4. www.mba4help.com SOLE PROPRIETORSHIP SOLE PROPRIETORSHIP • Easy to form-Business owned by one person • legal existence of proprietorship is extension of proprietor • may have any number of employees • Unlimited liability • Single Taxation
  • 5. www.mba4help.com Business Structures PARTNERSHIP • Business owned by at least two people • may have any number of employees • Must be in writing for more than one year • NO double Taxation • Unlimited Liability for all partners
  • 6. www.mba4help.com Partnership form of organization A partnership is an association of two or more persons to carry on as co- owners of a business for profit. Partnerships are fairly easy to form. People form partnerships simply by a verbal agreement, or more formally, by written agreement. A partnership is a legal entity. A partnership can own property (land, buildings, equipment), and can sue or be sued. A partnership also is an accounting entity. Thus, the personal assets, liabilities, and transactions of the partners are excluded from the accounting records of the partnership, just as they are in a proprietorship.
  • 7. www.mba4help.com Partnership and taxes The net income of a partnership is not taxed as a separate entity. But, a partnership must file an information tax return showing partnership net income and each partner's share of that net income. Each partner's share is taxable at personal tax rates, regardless of the amount of net income each withdraws from the business during the year.
  • 8. www.mba4help.com Mutual Agency Mutual agency means that each partner acts on behalf of the partnership when engaging in partnership business. The act of any partner is binding on all other partners. This is true even when partners act beyond the scope of their authority, so long as the act appears to be appropriate for the partnership.
  • 9. www.mba4help.com Limited Life A partnership may be ended voluntarily at any time through the acceptance of a new partner or the withdrawal of a partner. It may be ended involuntarily by the death or incapacity of a partner. Partnership dissolution occurs whenever a partner withdraws or a new partner is admitted. Dissolution does not necessarily mean that the business ends. If the continuing partners agree, operations can continue without interruption by forming a new partnership.
  • 10. www.mba4help.com Unlimited Liability Each partner is personally and individually liable for all partnership liabilities. Creditors' claims attach first to partnership assets. If these are insufficient, the claims then attach to the personal resources of any partner, irrespective of that partner's equity in the partnership. Because each partner is responsible for all the debts of the partnership, each partner is said to have unlimited liability
  • 11. www.mba4help.com Co-Ownership of Property Partners jointly own partnership assets. If the partnership is dissolved, each partner has a claim on total assets equal to the balance in his or her respective capital account. This claim does not attach to specific assets that an individual partner contributed to the firm. Similarly, if a partner invests a building in the partnership valued at $100,000 and the building is later sold at a gain of $20,000, the partners all share in the gain.
  • 12. www.mba4help.com Share Income or loss Partnership net income (or net loss) is also co-owned. If the partnership contract does not specify to the contrary, all net income or net loss is shared equally by the partners. As you will see later, though, partners may agree to unequal sharing of net income or net loss.
  • 13. www.mba4help.com Limited partnership “Ltd.,” or “LP” In a limited partnership, one or more partners have unlimited liability and one or more partners have limited liability for the debts of the firm. Those with unlimited liability are general partners. Those with limited liability are limited partners. Limited partners are responsible for the debts of the partnership up to the limit of their investment in the firm. Limited partners does not get involved in management.
  • 14. www.mba4help.com Limited Liability Partnership In an LLP, all partners have limited liability. No general partners. The LLP is designed to protect innocent partners from malpractice or negligence claims resulting from the acts of another partner. These professional partnerships vary in size from a medical/Lawyer partnership of three to five doctors, to 150 to 200 partners.
  • 15. www.mba4help.com One major advantage of a partnership is to combine the skills and resources of two or more individuals. Partnerships are easily formed and are relatively free from government regulations and restrictions. A partnership does not have to contend with the “red tape” that a corporation must face. Partners generally can make decisions quickly. Advantages & Disadvantages
  • 16. www.mba4help.com The Partnership Agreement Ideally, the agreement of two or more individuals to form a partnership should be expressed in a written contract, called the partnership agreement or articles of co-partnership. The partnership agreement contains such basic information as the name and principal location of the firm, the purpose of the business. 1. Names and capital contributions of partners. 2. Rights and duties of partners. 3. Basis for sharing net income or net loss. 4. Provision for withdrawals of assets. 5. Procedures for submitting disputes to arbitration. 6. Procedures for the withdrawal or addition of a partner. 7. Rights and duties of surviving partners in the event of a partner's death.
  • 17. www.mba4help.com Partner's initial investment Each partner's initial investment in a partnership is entered in the partnership records. The partnership should record these investments at the fair market value of the assets at the date of their transfer to the partnership. All partners must agree to the values assigned.
  • 18. www.mba4help.com The partnership records the investments Investment of A. Rolfe Cash 8,000 Office Equipment 4,000 A. Rolfe, Capital 12,000 (To record investment of Rolfe) Investment of T. Shea Cash 9,000 Accounts Receivable 4,000 Allowance for Doubtful Accounts 1,000 T. Shea, Capital 12,000 (To record investment of Shea)
  • 19. www.mba4help.com Dividing Net Income or Net Loss Partners equally share partnership net income or net loss unless the partnership contract indicates otherwise. The same basis of division usually applies to both net income and net loss. It is customary to refer to this basis as the income ratio, the income and loss ratio, or the profit and loss (P&L) ratio.
  • 20. www.mba4help.com LLC-Corporations LLC-CORPORATIONS • Hybrid for of Corporations • One or more owners • Owners are call members • No double taxation • Less paper work and regulations • More freedom
  • 21. www.mba4help.com Limited Liability Companies A hybrid form of business organization with certain features like a corporation and others like a limited partnership is the limited liability company, or “LLC.” An LLC usually has a limited life. The owners, called members, have limited liability like owners of a corporation. Whereas limited partners do not actively participate in the management of a limited partnership (LP), the members of a limited liability company (LLC) can assume an active management role. For income tax purposes, the IRS usually classifies an LLC as a partnership.
  • 23. www.mba4help.com Corporations CORPORATION • an entity created by a state stature • exists separately from and independently of the owners • may have one of more owners • owners are called shareholders or stockholders • ownership evidenced by stock certificate
  • 24. www.mba4help.com Corporation is created by law A corporation is created by law, and its continued existence depends upon the statutes of the state in which it is incorporated. As a legal entity, a corporation has most of the rights and privileges of a person. The major exceptions relate to privileges that only a living person can exercise, such as the right to vote or to hold public office. A corporation is subject to the same duties and responsibilities as a person. For example, it must abide by the laws, and it must pay taxes.
  • 25. www.mba4help.com Publicly held and Privately Classification by ownership distinguishes between publicly held and privately held corporations. Publicly held corporation may have thousands of stockholders. Its stock is regularly traded on a national securities exchange such as the New York Stock Exchange. Most of the largest U.S. corporations are publicly held. Examples of publicly held corporations are Intel, IBM, Google, and General Electric. Privately held corporation usually has only a few stockholders, and does not offer its stock for sale to the general public.
  • 26. www.mba4help.com Separate Legal Existence As an entity separate and distinct from its owners, the corporation acts under its own name rather than in the name of its stockholders. Ford Motor Company may buy, own, and sell property. It may borrow money, and may enter into legally binding contracts in its own name. It may also sue or be sued, and it pays its own taxes. The acts of its owners (stockholders) do not bind the corporation unless such owners are agents of the corporation
  • 27. www.mba4help.com Limited Liability of Stockholders Corporation is a separate legal entity, creditors have recourse only to corporate assets to satisfy their claims. The liability of stockholders is normally limited to their investment in the corporation. Creditors have no legal claim on the personal assets of the owners unless fraud has occurred. Even in the event of bankruptcy, stockholders' losses are generally limited to their capital investment in the corporation.
  • 28. www.mba4help.com Transferable Ownership Rights Shares of capital stock give ownership in a corporation. These shares are transferable units. Stockholders may dispose of part or all of their interest in a corporation simply by selling their stock. The transfer of ownership rights between stockholders normally has no effect on the daily operating activities of the corporation.
  • 29. www.mba4help.com Ability to Acquire Capital It is relatively easy for a corporation to obtain capital through the issuance of stock. Investors buy stock in a corporation to earn money over time as the share price grows, and because a stockholder has limited liability and shares of stock are readily transferable. Also, individuals can become stockholders by investing relatively small amounts of money. In sum, the ability of a successful corporation to obtain capital is virtually unlimited.
  • 30. www.mba4help.com Continuous Life Since a corporation is a separate legal entity, its continuance as a going concern is not affected by the withdrawal, death, or incapacity of a stockholder, employee, or officer. As a result, a successful enterprise can have a continuous and perpetual life.
  • 31. www.mba4help.com Corporation Management As in Ford Motor Company, stockholders legally own the corporation. But they manage the corporation indirectly through a board of directors they elect. The board, in turn, formulates the operating policies for the company. The board also selects officers, such as a president and one or more vice presidents, to execute policy and to perform daily management functions. The chief executive officer (CEO) has overall responsibility for managing the business.
  • 33. www.mba4help.com Forming a Corporation The initial step in forming a corporation is to file an application with the Secretary of State in the state in which incorporation is desired. The application contains such information as: (1) the name and purpose of the proposed corporation; (2) amounts, kinds, and number of shares of capital stock to be authorized; (3) the names of the incorporators; and (4) the shares of stock to which each has subscribed.
  • 35. www.mba4help.com Additional Taxes In addition, stockholders must pay taxes on cash dividends (pro rata distributions of net income). Thus, many argue that the government taxes corporate income twice (double taxation)—once at the corporate level, and again at the individual level.

Editor's Notes

  1. Time and money are the most important resources in your business. Leveraging these resources wisely is one of the most important aspects of maximizing profit in your business.By creating a professional business plan you will learn how to best use your time and money.When you know your direction, you can set goals and create plans toachieve those goals.