Accountants’ Position

Accountants ar in a position to provide advice to telephone circuit owners to determine which composition structure is best for their particular business venture. remember that you were approached by a friend or relative interested in starting a specialty business to design men and women clothing. treat the advantages and disadvantages of at least 2 (2) forms of business structures. Make a good word regarding the structure your friend or relative should use based on this particular venture. Explain your rationale.Based on your recommendation regarding the appropriate business structure, relieve the major advantages and disadvantages of the business owner with minimal accounting experience maintaining the companys books kinda of hiring an accountant. Discuss the major impact to the users of accounting statements if the statements are prepared in error. Provide support for your position. The first business structure that I would recommend, would be a teammateship I would in form them that cosmopolitan partnerships consist of two or more partners who are both responsible for the business.They cover the assets and profits, as sanitary as the liabilities and management responsibilities for running the business. Some benefits of general partnerships is their simpleness and flexibility. prevalent partnerships are usually less expensive to form and occupy less paperwork and formalities than corporations, limited partnerships or limited liability partnerships. General partnerships can choose a centralized management structure, like a corporation, or a completely decentralized structure, where every partner is actively involved in the management of the business.Other advantages of a general partnership are that the partners can combine resources and share the financial commitment. Some disadvantages to general partnerships, in the first place liability. General partners are personally liable for the business debts and liabilities. distributively partne r is also liable for the debts incurred by the actions of other partners. Because of this potential personal liability, general partnerships are limited in their ability to raise money and tempt investors.The second business structure that I would recommend and I sound off would be most beneficial to both parties would be an LLC (Limited Liability Company). A limited liability company, is a new form of business administration that is certainly worth consideration. It has several features that create favorable tax treatments, as well as protection from personal liability. Since the status of the LLC form of organization varies somewhat from state to state, be certain to find out how your states righteousness applies.Some of the advantages of an LLC are, LLC allows for an unlimited number of members however, if the LLC has just one owner, it will be taxed as a sole proprietorship. The LLC allows for the special allocation of profits the disproportionate separate of member profits and losses in different components than their respective percentages of ownership. This way of life that members can enjoy the benefits of receiving profits and writing off losses in excess of their individual ownership percentage.The members enjoy limited liability, which means they are personally protected from any liability of the LLC and successful judgments, as well as from the LLC itself. And just with all advantages there are always disadvantages. Each members pro-rata share of profits represents taxable incomewhether or not a members share of profits is distributed to him or her. The managing members share of the bottom-line profit of the LLC is considered earned income, and therefore is strung-out to self-employment tax.The members share of bottom-line profit is not considered earned income because the members are considered to be inactive owners therefore, the members do not qualify for special tax-favored rush benefit treatment. As a member of an LLC, you are not all owed to turn over yourself wages. I would strongly recommend going with an LLC simple because there is a lot less risk involved. There is a large percentage that businesses fail in the first year, and with that being said you dont want to lose your business and you personal property too.