Saturday, July 27, 2019

Business Entities Case Study Example | Topics and Well Written Essays - 500 words

Business Entities - Case Study Example This is especially important in the aviation industry since the risk of loss is considerably higher as the investment is higher. Therefore if the company faces any loss, Stanton would not have to bear the loss from his individual pocket. Most entities formed in the aviation industry as limited liability companies because of this main reason (Speciale, 2006). Another benefit of his form of business entity is that Stanton can choose this own tax paying option. As a member of the LLC, Stanton can chose to either be taxed as a sole proprietorship as he was doing before of he can choose to be taxed as partnership or a corporation. Since Stanton would have to pay low taxes as a sole proprietor given the current tax rates, he should opt for taxing his LLC as sole proprietor (Speciale, 2006). However, turning the business into an LLC is not without its cons. Stanton would have to face certain disturbances in the business. This primarily includes filing the proper paperwork for turning the company into an LLC which is a long process. Changing the company from sole proprietorship to Limited Liability Company also requires certain investment and the company is no longer a small company operated by one single owner. Also when new members would enter the business, the paperwork for the company would naturally increase as for every major decision, written approvals from the members would be required (Speciale, 2006). Apart from this, Stanton, by choosing to form an LLC would require new members to join the company. This, in turn, would mean loss of full control over the company. Right now, Stanton is the only investor, manager and controller of the business and therefore he can make any decisions regarding the business. However, when new members will bring their investment in the business, they would demand certain control over the business. As a result, control over the decision making process would be shared (Speciale, 2006). Also Stanton would now

No comments:

Post a Comment