McGraw-Hill/Irwin 3-1 © 2006 The McGraw-Hill Companies, Inc All rights rese Chapter Forms Of Ownership Of Small Business Primary Legal Forms Advantages & Disadvantages Of Each Form Other Legal Forms 3-2 Right Legal Form: Business Factors To Consider Future Size Nature Desired Control Legal Vulnerability Tax Implications Expected Profit (Loss) Re-investment Personal Cash Needs McGraw-Hill/Irwin PhotoLink/Getty Images 3-3 © 2006 The McGraw-Hill Companies, Inc All rights rese Relative Positions Of Legal Forms McGraw-Hill/Irwin 3-4 © 2006 The McGraw-Hill Companies, Inc All rights rese Legal Form By Industry McGraw-Hill/Irwin 3-5 © 2006 The McGraw-Hill Companies, Inc All rights rese Legal Form By Industry’s Receipts McGraw-Hill/Irwin 3-6 © 2006 The McGraw-Hill Companies, Inc All rights rese Advantages/Disadvantages Of Proprietorship Insert Figure 3.2 McGraw-Hill/Irwin 3-7 © 2006 The McGraw-Hill Companies, Inc All rights rese Partial List Of Federal Tax Forms: Sole Proprietorship Form 1040: Individual Income Tax Return Schedule C: Business Profit(Loss) Schedule SE: Self-Employment Tax Form 1040ES: Estimated Tax For Individuals Form 4562: Depreciation & Amortization Form 8829: Expenses For Business Use Of Your Home Forms 941, W-2, W-3: Employment Tax Forms McGraw-Hill/Irwin 3-8 © 2006 The McGraw-Hill Companies, Inc All rights rese Schedule C Front Back McGraw-Hill/Irwin 3-9 © 2006 The McGraw-Hill Companies, Inc All rights rese Advantages/Disadvantages Of Partnership McGraw-Hill/Irwin 3-10 © 2006 The McGraw-Hill Companies, Inc All rights rese Form 1065 K-1 (Pages & 4) Front Back McGraw-Hill/Irwin 3-15 © 2006 The McGraw-Hill Companies, Inc All rights rese Advantages/Disadvantages Of Corporation McGraw-Hill/Irwin 3-16 © 2006 The McGraw-Hill Companies, Inc All rights rese Form 1120A Front Back McGraw-Hill/Irwin 3-17 © 2006 The McGraw-Hill Companies, Inc All rights rese Form 1120 (Pages & 2) Front Back McGraw-Hill/Irwin 3-18 © 2006 The McGraw-Hill Companies, Inc All rights rese Form 1120 (Page & 4) Front Back McGraw-Hill/Irwin 3-19 © 2006 The McGraw-Hill Companies, Inc All rights rese Formation Of Corporation Articles Of Incorporation- Filed With State Corporate CharterComes From State Buy-Sell Agreement- Include In Articles Of Incorporation McGraw-Hill/Irwin 3-20 © 2006 The McGraw-Hill Companies, Inc All rights rese Corporate Governance Stockholders Elects Board Of Directors Appoints Corporate Officers McGraw-Hill/Irwin 3-21 © 2006 The McGraw-Hill Companies, Inc All rights rese S Corporation Exempt From Multiple Taxation Less Than 75 Stockholders TAXES One Class Of Stock No Corporations/Partnerships Can Be Stockholders Stockholders= U.S Citizens Or Permanent Residents Early 1990s Lost Appeal Because Of Tax Law Change Royalty-Free/CORBIS McGraw-Hill/Irwin 3-22 © 2006 The McGraw-Hill Companies, Inc All rights rese Partial List Of Federal Tax Forms: S Corporation Form 1120S: Income Tax Return For S Corporation Form 1120S K-1: Shareholder’s Share Of Income, Credit, Deductions Form 4625: Depreciation Forms 941, W-2, W-3: Employment Tax Forms Form 1040: Individual Income Tax Return Schedule E: Supplemental Income(Loss) Schedule SE: Self-Employment Tax From 1040ES: Estimated Tax For Individuals Other Forms Royalty-Free/CORBIS McGraw-Hill/Irwin 3-23 © 2006 The McGraw-Hill Companies, Inc All rights rese Limited Liability Companies Since 1977 Benefits: Limited Liability Taxed As Partnership Emma Lee/Life File/Getty Images Similar To S Corporation Owners = Members Lifespan- Determined At Organization McGraw-Hill/Irwin 3-24 © 2006 The McGraw-Hill Companies, Inc All rights rese Other Legal Forms Of Ownership Limited Liability Partnership Protects Individual Partners Not Recognized By Every State Family Limited Liability Partnership Partners Related Agriculture/Family Farms Professional Service Corporation F Schussler/PhotoLink/Getty Images Provides Licensed Professional Services Doctors, Lawyers, & Accountants McGraw-Hill/Irwin 3-25 © 2006 The McGraw-Hill Companies, Inc All rights rese Other Legal Forms Of Ownership (cont’d) Nonprofit Corporations Civic, Charitable, Educational, Religious Tax Exempt Cooperative Independent Producers Buys/Sells For Clients Royalty-Free/CORBIS Joint Venture Fractional Ownership McGraw-Hill/Irwin 3-26 © 2006 The McGraw-Hill Companies, Inc All rights rese Form 1120S (Page & 2) Front Back McGraw-Hill/Irwin 3-27 © 2006 The McGraw-Hill Companies, Inc All rights rese Form 1120S (Page 3) McGraw-Hill/Irwin 3-28 © 2006 The McGraw-Hill Companies, Inc All rights rese Checklist For Legal Form Evaluation McGraw-Hill/Irwin 3-29 © 2006 The McGraw-Hill Companies, Inc All rights rese ...Chapter Forms Of Ownership Of Small Business Primary Legal Forms Advantages & Disadvantages Of Each Form Other Legal Forms 3-2 Right Legal Form: Business Factors To Consider Future Size... McGraw-Hill Companies, Inc All rights rese Legal Form By Industry McGraw-Hill/Irwin 3-5 © 2006 The McGraw-Hill Companies, Inc All rights rese Legal Form By Industry’s Receipts McGraw-Hill/Irwin 3-6 ©... Return Schedule C: Business Profit(Loss) Schedule SE: Self-Employment Tax Form 1040ES: Estimated Tax For Individuals Form 4562: Depreciation & Amortization Form 8829: Expenses For Business Use