This module discussed several differences between individuals and corporations regarding tax treatment. Provide the following; 1....

This module discussed several differences between individuals and corporations regarding tax treatment. Provide the following;

1. If a colleague asked you for advice on incorporating, list at least two questions you would ask them to help them decide their business structure from a tax perspective.

2. Which two differences do you think are the most important for business owners to consider and why.

Solutions

Expert Solution

1) Two of the most important questions that need to be considered before incorporation to decide on the business structure from tax perspective are:

a) Who shall be the owners of the business

b) How shall the incorporated business distribute its profit to the owners. It shall also keep in mind whether the business shall generate profit or loss in the initial stages.

2) The differences that are necessary to consider are:

The extent to which the personal assets are at risk from the liability arising out of operation of business that one is considering. In case of sole proproitership, there is no personal liability protection while a corporation on other hand is a separate legal entity and therefore liability is limited to assets of the corporations.

The incorporation shall bear in mind to avoid multiple taxation that arises from some types of incorporating structures. While corporation may be advantageous when it comes to liability, however theya re double taxed, first the profit of corporations is taxed and then the income distributed to owners or shareholders is taxed. Sole proproitership do not have to be taxed twice

jeff jeffy answered 1 year ago

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