Business Entitites Paper Bus 415

Business Entitites Paper Bus 415

Business Entitites

Business Entities
ReaLee A. Mercier

Business Entities
    To operate effectively a company must have a strong core to be successful. Important aspects are considered before start-up, these aspects include: taking control, taxation, and liability issues. In addition, a company needs to be certain that they are in compliance with the laws and regulations. Identifying the risks that a company must anticipate in order to protect themselves is also a major consideration. The discussion that follows will take a look at three types of companies and examine a few of the different scenarios that a company looks at upon start-up and maintaining a well run company.
Restaurant/ Bar
    Bob and Harry are planning to open a sports bar restaurant, they do not have the needed money to open such a place. Jim is a wealthy investor who will put up the needed capital to open the restaurant and bar. Jim is a busy person and makes it clear that he will not have the time to be part of the day-to-day operations in the business. Though Jim will not be a participant in the business he will receive a percentage of ownership and it’s profits should the restaurant do well while allowing Bob and Harry to manage the business.
    When forming a general partnership, the business must meet four criteria: One, the business must be an association of two or more people. Two the people must be carrying on a business. Three, the people must be co-owners of the business. Four, the business must be for profit. Bob, Harry, and Jim meet all the criteria necessary to for this general partnership.
    Partnerships do not have tax liablility, because of this taxation is on each individual partner’s personal tax return. “A partnership must file an information return with the government explaining the income, or losses, incurred by the partnership,”(Cheeseman, 2010, p. 225, pp.2). The government needs a way to trace the partners’ income tax returns and an information return...