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MANA 3325 – Thurburn Lecture 09-17-13 Slides

MANA 3325 – Thurburn Lecture 09-17-13 Slides. Forms of Business Ownership. Limited Liability Company (LLC):. Resembles an S Corporation but is not subject to the same restrictions. Two documents required: Articles of organization Operating agreement. MANA 3325 – Thurburn

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MANA 3325 – Thurburn Lecture 09-17-13 Slides

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  1. MANA 3325 – Thurburn Lecture 09-17-13 Slides Forms of Business Ownership Limited Liability Company (LLC): Resembles an S Corporation but is not subject to the same restrictions. Two documents required: • Articles of organization • Operating agreement

  2. MANA 3325 – Thurburn Lecture 09-17-13 Slides Forms of Business Ownership Limited Liability Company Claims of LLC’s Creditors barrier barrier LLC’s Assets Member’s Personal Assets Member’s Personal Assets What is a Professional Corporation?

  3. MANA 3325 – Thurburn Lecture 09-17-13 Slides Forms of Business Ownership Professional Corporation: • Designed for professions – lawyers, doctors, dentists, accountants and other professionals • Created in the same manner as a corporation • Identified by the abbreviations: • P.C. – Professional Corporation • P.A. – Professional Association • S.C. – Service Corporation What Limitation must a PC comply with?

  4. MANA 3325 – Thurburn Lecture 09-17-13 Slides Forms of Business Ownership Professional Corporation Limitations: Shares Owned By Licensed Professionals. At least One Incorporator must be Licensed. At least One Directory must be Licensed. Articles must designate Personal Services to be provided. Licensing Board Certifies that All Shares are held by Duly Licensed Individuals. What is a Joint Venture?

  5. MANA 3325 – Thurburn Lecture 09-17-13 Slides Forms of Business Ownership Joint Venture: Much like a partnership, but it: • Is formed for a specific purpose • Has a beginning and an end

  6. MANA 3325 – Thurburn Lecture 09-17-13 Slides Forms of Business Ownership Factors to Consider when choosing a Form of Ownership: Tax considerations Liability exposure Start-up and future capital requirements Control Managerial ability Business goals Management succession plans Cost of formation

  7. MANA 3325 – Thurburn Lecture 09-17-13 Slides Forms of Business Ownership What would be the best form of ownership for… A Local Restaurant? A Food Truck Business? A Lawn Care Business? A Chiropractor? A Software Company? A Consulting/Coaching Business?

  8. MANA 3325 – Thurburn Lecture 09-17-13 Slides Forms of Business Ownership Is there a Form of Ownership that is better than the others? Is there a Form of Ownership that is worse that the others? Is there a Form of Ownership that is evil?

  9. MANA 3325 – Thurburn Lecture 09-17-13 Slides Forms of Business Ownership How does the SEC requiring Quarterly Reports help Investors and the economy in general? How dies it hurt Investors and the economy in General?

  10. MANA 3325 – Thurburn Lecture 09-17-13 Slides Forms of Business Ownership Four Primary Ways to Manipulate Income and Losses: Move Expenses from This month to Next… Move Revenues from This month to Next… Move Expenses from Next month to This… Move Revenues from Next month to This.

  11. MANA 3325 – Thurburn Lecture 09-17-13 Slides Forms of Business Ownership Able Co. Data… Sole Proprietorship $10,000,000 in Sales $1,000,000 in Taxable Net Income Expenditure of $10,000 in December on an Advertising Expense for January. This is a Prepaid Item but it is small. No Shareholders No Loans. Expensing in the current year saves approx. $3,000 in taxes. Is this ‘wrong’ to do?

  12. MANA 3325 – Thurburn Lecture 09-17-13 Slides Forms of Business Ownership Able Co. Data… Corporation $10,000,000 in Sales $1,000,000 in Taxable Net Income Expenditure of $10,000 in December on an Advertising Expense for January. This is a Prepaid Item but it is small. No Shareholders other than Mr. Able. No Loans. Expensing in the current year saves approx. $3,000 in taxes. Is this ‘wrong’ to do?

  13. MANA 3325 – Thurburn Lecture 09-17-13 Slides Forms of Business Ownership Able Co. Data… $10,000,000 in Sales $1,000,000 in Taxable Net Income Expenditure of $10,000 in December on an Advertising Expense for January. This is a Prepaid Item but it is small. 5 Family Members are shareholders. No Loans. No Audit. Expensing in the current year saves approx. $3,000 in taxes. Is this ‘wrong’ to do?

  14. MANA 3325 – Thurburn Lecture 09-17-13 Slides Forms of Business Ownership Able Co. Data… $10,000,000 in Sales $1,000,000 in Taxable Net Income Expenditure of $100,000 in December on an Advertising Expense for January. This is a Prepaid Item but it is small. 5 Family Members are shareholders. No Loans. No Audit. Expensing in the current year saves approx. $30,000 in taxes. Is this ‘wrong’ to do?

  15. MANA 3325 – Thurburn Lecture 09-17-13 Slides Forms of Business Ownership Able Co. Data… $10,000,000 in Sales $1,000,000 in Taxable Net Income Expenditure of $500,000 in December on an Advertising Expense for January. This is a Prepaid Item. 5 Family Members are shareholders. No Loans. No Audit. Expensing in the current year saves approx. $150,000 in taxes. Is this ‘wrong’ to do?

  16. MANA 3325 – Thurburn Lecture 09-17-13 Slides Forms of Business Ownership Able Co. Data… $100,000,000 in Sales $10,000,000 in Taxable Net Income Expenditure of $1,000,000 in December on an Advertising Expense for January. This is a Prepaid Item. 100 shareholders own 35% of the company. Able owns the rest. No Loans. No Audit. Expensing in the current year saves approx. $300,000 in taxes. Is this ‘wrong’ to do?

  17. MANA 3325 – Thurburn Lecture 09-17-13 Slides Forms of Business Ownership Able Co. Data… $1,000,000,000 in Sales $100,000,000 in Taxable Net Income Expenditure of $10,000,000 in December on an Advertising Expense for January. This is a Prepaid Item. 100,000 shareholders own 90% of the company. Able owns the rest. Loans Audit for the SEC Expensing in the current year saves approx. $30,000,000 in taxes. Is this ‘wrong’ to do?

  18. MANA 3325 – Thurburn Lecture 09-17-13 Slides Forms of Business Ownership Able Co. Data… $10,000,000,000 in Sales $1,000,000,000 in Taxable Net Income Revenues of $1,000,000 in January are Accelerated by signing a Contract with another company. This is a Prepaid Item by the other company … a Liability to Able. It is ‘Not Significant’ to the overall picture of the company but it adds $.02 to the Earnings per Share. 100,000 shareholders own 90% of the company. Able owns the rest. Loans Audit for the SEC Expensing in the current year saves approx. $30,000,000 in taxes. Is this ‘wrong’ to do?

  19. MANA 3325 – Thurburn Lecture 09-17-13 Slides Forms of Business Ownership Able Co. Data… Is it wrong if it is Not Significant? Is it wrong if the Other Company is 100% separate from Able? Is it wrong if the Other Company is 99% owned by other shareholders and 1% owned by Able? Where do you draw the line?

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