Different Types Of Business Ownership

| The partners are jointly and severally liable for business debts and obligations. The partners are held personally responsible for the business and may be sued personally for liability. Partners’ personal assets are subject to lawsuit(s) made against the business. Lack of continuity; death of a partner may end the partnership/business if a buy/sell agreement is not in place. Disagreements may be difficult to resolve.

Having the appropriate structure is vital for an organisation or business to meet its aims and objectives. A business may be structured by:

Liability- The general partner would be liable for all unlimited responsibility on all tasks and debt, while the limited partner will not loss more than their investment.

The scenario that present this case is a company faces litigation. I have to surmise how this liability will be reported as well as the resulting effects on the financial statements in the years presented. I will present some facts of this case, and by these facts I will resolve the primary accounting which in my opinion it could accrued the liability, disclose the liability or count it as immaterial.

I would like to take this opportunity to share with you, three possibilities for your business formation. Making the proper decision on which formation to choose can be a daunting task and I am pleased that you have chosen ABC Accounting to assist you in this decision. One of the main criteria you provided was the protection of you and your family from personal liability. Each of the three options that will be discussed, provide the personal liability protection and will give you the ability to make the proper decision for you and your business.

Partnership liability tort can take place when a partner or all partners acting on partnership business causes injury to a third person. Cause of this tort could be a negligent act, a breach of trust, breach of fiduciary duty, defamation, fraud, or another intentional tort (Cheeseman, 2010, p. 538). Under the Uniform Partnership Act, partners are jointly and severally liable for torts and breaches of trust (UPA, 2010). This is true even if the co-partner(s) did not participate in the act. The joint and severally liable tort permits a third party to sue one or more of the partners

People who do business as a sole proprietor or in a partnership are liable for the torts committed by them and for torts committed by the business and its agents. The best way to avoid tort liability is to set establish their business as a corporation or a limited liability company. A corporation or limited liability company will act as its own entity for all intent and purposes. When it becomes it own entity you will have to separate your finances from that of the business. Remember that it does not matter what type of business organization you select,

In this business formation the business takes on all liability removing any personal liability from all involved partners.

There are five standard business entity types, and each will have pros and cons from a business and tax standpoint. You will need to select which entity you will be, and file the correct legal paperwork at the onset of your new venture. The five business entities are:

In such a way, the entity is not subject to taxation; though, it has to file an information form of a tax return (Schwidetzky & Brown, 2015). Correspondingly, limited liability companies (LLCs) have an upper edge in taxation as they effectively shield the personal assets of their owners. In case the business has been engrossed in bad debts, lenders cannot seize its assets. From a taxation standpoint, the pass-through tax procedure is embraced, implying that an LLC does not pay taxes. The income generated from the business is eventually passed to the company owners (Schwidetzky & Brown, 2015). Consequently, they are to claim losses or profits in their personal taxation

any amount is not at risk, you must check the box in column (e) on line 28 and attach Form 6198. See instructions.

Depending on the % of partnership the liability will be decided. If the partnership is limited by some % then the partners will be responsible only fro that much % only.

* LLCs in most states are treated as entities separate from their members, whereas in other jurisdictions[which?] case law has developed deciding LLCs are not considered to have separate legal standing from their members (see recent D.C. decisions[which?]).

Differences from corporations. Many of the differences between LLCs and corporations have been the crux in the area of litigation, the first being the lack of corporate formalities. Unlike a corporation, an LLC can be managed by its members or appointed managers and does not require periodic meetings. Although every state now has LLC legislation (Albert, 2015) which impose default fiduciary duties, these duties can be modified or eliminated altogether by the members of the LLC (Raju & Remming, 2012). As opposed to corporations following FASB ASC 105 – Generally

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