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What business entities are available for a new business? Wha

What business entities are available for a new business? What are the tax and nontax advantages of each form? Select two business types and provide an example of when that selection is most appropriate from a tax perspective and from a nontax perspective.

Once a business has elected its tax status using check-the-box regulations, what options are available if it needs to change its tax status? What should a business consider before electing to change its tax status?

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What business entities are available for a new business? What are the tax and nontax advantages of each form? Select two business types and provide an example of when that selection is most appropriate from a tax perspective and from a nontax perspective.

The most common forms of business entities are a sole proprietor, a corporation, a partnership, or an LLC.
Sole proprietor:
advantages - the owner retains full control over the business and the business operations. The owner and the business are inseparable. The income and expenses from the business is reported on the owner's 1040. There are no high accounting fees (typically), and the owner saves money on accounting work. The greatest advantage here, tax and non-tax, is that the owner or owners have full control, and can basically run the company as they want to, without having to answer to anyone, including a board of directors.

disadvantages - when the owner dies, so does the business. It does not exist without the owner. The owner, as a sole proprietor, can never go on payroll, and have W-2 income. All checks written to the owner are considered to be draw (cash). All ...

Solution Summary

What business entities are available for a new business? What are the tax and nontax advantages of each form? Select two business types and provide an example of when that selection is most appropriate from a tax perspective and from a nontax perspective.

Once a business has elected its tax status using check-the-box regulations, what options are available if it needs to change its tax status? What should a business consider before electing to change its tax status?

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