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    Types of entities, tax and legal advantages

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    Please help writing about this topic. Assume you are the new tax and accounting consultant for a small business client, Jon Smith. His consulting practice that he owns 100% and is the only employee of has previously been reported on Schedule C as a proprietorship. You want to advise him about the tax and legal advantages of becoming a Subchapter S corporation. Write a detailed outline of the points you would make with Jon. Discuss both legal and tax advantages.

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    Please refer to the attached file for the response.


    Herberger (1965) through a book by Case and Fair (2007) noted that "owners of corporations, proprietorship, and partnerships all bear the burden of the corporate tax in rough proportion to profits, even though it directly levied only on corporations".

    Tax computations and payments vary depending on the nature of the organization or of the taxpayer. To Keown et al. (2005), "Sole proprietors report their income in their personal tax returns, and pay the taxes owed. Partnerships report income from the partnership but do not pay taxes. Each partner reports his or her portion of the income and pays the corresponding taxes. The corporation, as a separate legal entity, reports its income and pays taxes related to these profits. The owners or stockholders of the corporation do not report these earnings in their personal tax returns, except when these earnings are distributed to them in ...

    Solution Summary

    The solution discusses the types of entities, tax and legal advantages.