In preparation for meetings with each of your other assigned clients, you want to provide them with written information regarding the tax laws governing their respective form of business.
In your own words with a minimum of two references.© BrainMass Inc. brainmass.com June 3, 2020, 9:37 pm ad1c9bdddf
Going into business involves risk and owners need to understand the extent of the risk involved. Every new business intends to succeed (or owners wouldn't start a new business) but statistics have been written that 85% of new businesses fail. I suspect that statistic relates to sole proprietorships more than other business forms, but it is worth noting in any event.
Prospective new business owners would be wise to schedule a meeting with a CPA and/or attorney to understand more about starting a new business. Additionally, a well-thought out business plan may be as important as selecting an entity form for starting a business.
Basic tax law for partnerships and corporations is complex and voluminous. There are hundreds of pages of law plus thousands of pages of case law challenging and interpreting the law. This discussion is a summary of the more important points of law.
LLCs have been included in this discussion because they represent a growing section of entity taxation.
What is a partnership? An unincorporated organization with two or more members is generally classified as a partnership for federal tax purposes if its members carry on a trade, business, financial operation, or venture and divide its profits. http://www.irs.gov/publications/p541/ar02.html#d0e209
The rules governing the federal taxation of partners and partnerships are intended to permit taxpayers to conduct joint business and investment activities through a flexible economic arrangement without incurring an entity-level tax. In the landmark case of Commissioner v. Tower1, the Supreme Court stated that a partnership "is generally said to be created when persons join together their money, goods, labor, or skill for the purpose of carrying on a trade, profession, or business and when there is community of interest in the profits and losses." ...
The 1120 word solution gives a good overview of the important traits of partnerships, LLCs, and corporations. It includes comparative discussion to demonstate the differences, and the significance of the differences in law and taxation.