Corporate tax

1. Discuss the advantages and disadvantages of the corporate tax. (6 marks) Advantages i. Source of Revenue - Corporate taxes can be effectively utilized as a tool for the government to generate higher revenues as corporations are the largest money makers in the every economy. The government can therefore create a steady and strong flow of cash by targeting those making large profits. ii. Distribution – Taxing companies that are making profits helps redistribute the benefits to the society through provision of public services that generally the private corporations would not provide. It still allows for businesses to function and grow and do not overly inhibit companies’ ability to make profit. iii. Equitable – This tax is equitable in that…

LIT1 Task A SOLE PROPRIETORSHIP: • LIABILITY – The owner and the business are considered as one and so the owner has unlimited liability for the business. Therefore the all of the owner’s personal assets, the business’s assets and the business’s future earnings may be at risk. • INCOME TAXES – All income for the business goes on the owner’s personal income tax returns whether federal, state or local. One advantage of the sole proprietorship is that the business is not a…

o Sole Proprietorship: o Liability- Business owners do not possess any particular differences in regard to assets. The assets of the business can really be used in many ways, including the way to pay any personal debt that was acquired also the personal assets are a way to pay the business debts too because when dealing with a sole proprietorship it is subject to being accessible to unlimited liability. o Income Taxes – The income or the revenue brought in with a sole proprietorship is always…

Those involved in a limited partnership are in a unique situation in that they are only legally responsible for their investment in the partnership interest. In certain companies, “the limited partner may be subject to special tax liabilities… individual limited … partners include their allocable share of partnership income or loss on their individual income tax returns and pay taxes on that share based on their tax bracket” (Entrepreneur, 2014). Corporation Tinker & Tailor’s Home Security…

expenditures of $30,000 that must be paid prior to operating the equipment. Marketing representatives say that the company should be able to produce and sell $1,200,000 per year. The cost of goods sold are anticipated to be 30% of sales. Incremental labor costs are $90,000 per year, maintenance costs are $25,000 per year and incremental overheads are anticipated to be $50,000. You must calculate depreciation. Miscellaneous costs aside from depreciation are $42,000 per year. This project…

getting started and then later on change their legal structure to something else. Often times sole proprietorships are small restaurants, usually in small neighborhoods. The second form of business ownership is a partnership. “In a partnership, two or more individuals form a partnership agreement before starting a new restaurant” (Parpal, 2015). For example, Boulder Lodge & Grill, formally known as Mac & Chester’s SRO, in Oak Grove, Minnesota, is a partnership. Mac and Chester came together to…

financial gain earned by its owner. A sole man of affairs reports the only real proprietary financial gain and/or losses and expenses by filling out and filing a Schedule C, at the side of the quality type 1040. Your profits and losses square measure 1st recorded on a form referred to as Schedule C, that is filed at the side of your 1040. Then the "bottom-line amount" from Schedule C is transferred to your personal official document. This side is enticing as a result of business losses you…

skills and knowledge. On the other hand, a partnership faces a higher risk of dissolution if one of the partners wishes to leave or dies. In terms of liability, each partner is personally liable for the debts of the business, up to and including all actions made by the other partners. A corporation, unlike a sole proprietorship or a partnership, has limited liability. The shareholders in the corporation are only liable for the amount they invested into the corporation and no more; there is no…

For example, the hardware store, Tom is a sole proprietorship. Tom is the sole owner he hires a full staff of employees, but the store is owned 100%. If someone walks in, sliding on the wet floor and impales himself or herself on the chainsaw in a row, and Tom will be 100% when the man in charge of the unfortunate family disemboweled suing for wrongful death. In return for the risk. Tom retains all of the profit after tax earned from the store and can spend it any way he pleases. Always…

that seem to either tank or struggle just to stay afloat. Per Forbes.com (2013) Approximately 543,000 new businesses get started each month (but more employer businesses shut down than start up each month). Explain why Acme Fireworks should not operate as a sole proprietorship. Recommend a new business entity, and provide rationale to support your recommendation. ` What I suggest is that Acme Fireworks morphs itself into a corporation. A business does not have to be large in order to be a…