Question

What are two methods of conducting business in the U.S. Compare the tax advantages and disadvantages. Provide examples to support the advantages and disadvantages identified.

Answer 1

ANSWER:

Given;

What are two methods of conducting business in the U.S ?

US companies intending to carry on international business can do so in three separate manners:

1. International Sales : A US company can carry out international sales by either selling directly to customers,selling to retailers, or selling to distributors.Each of the methods of international selling requires different procedures.
2. Direct Sales : Direct sales to customers may be achieved through foreign-listed websites,catalogs, and international mail. payment from the customers is often facilitated through third-party payment websites, such as PayPal or Apple pay. the main issues with direct sales are the cost of shipment can be high, and customers service and returns can be difficult.

Compare the tax advantages and disadvantages. Provide examples to support the advantages and disadvantages identified?

Advantages of Tax in LLC:

• Tax rates: The tax rate for an LLC depends on the total income of the owner. At higher levels of net income, the LLC may be paying taxes at a lower tax rate than a corporation. For example, the corporate tax rate for $75,000 in taxable income is 34%, while the personal tax rate for this same taxable income is 25%. (Other factors and other income may be included in the personal income of a business owner.)
• Double taxation: Corporate owners may be subject to double taxation, while an LLC owner is not. Corporate owners have double taxation. The corporation pays taxes on corporate net income, and the corporate owners must pay tax on any dividend income they receive.

• Franchise taxes: In some states, corporations must pay state corporate franchise taxes, but some states do not require LLC's to pay this tax

Disadvantages of Tax in LLC:

• All profits are taxable: LLC members must pay taxes on their distributive share of the profit of the company, even if they have not received a distribution of those profits. Owners of a corporation do not pay taxes on profits unless they are distributed, usually in the form of dividends.
• No property tax exemption:Some states exempt corporations from property tax, but not other entities, including LLCs.
• Self-employment taxes: LLC owners must pay self-employment taxes(Social Security/Medicare) while corporate owners who serve as employees only pay half of the self-employment tax amount on their salaries; the rest is paid by the corporation.