Car Wash Full Service in Kapolei Essay Example | Topics and Well Written Essays - 1250 words

Car Wash Full Service in Kapolei - Essay Example Advantages C corporations have low risks since the government is responsible for its audits and tax returns The owners (shareholders) have limited liabilities to the business debts C Corporation benefits from writing-off of debts and business expenses C corporations are able to raise high capitals through sale of shares to different investors The majority shareholders or business owners benefit from a variety of stocks sold by the corporation Disadvantages Slow decision making since all shareholders must be consulted when making a major business decision through the annual general meeting Business owners are not directly involved in running the business Not easy to start since, the corporation needs to comply with strict legal requirements from the government S Corporation S corporation is considered a regular corporation with less than 100 business owners (shareholders). The corporation passes its net income and losses to the shareholders as stipulated under the Internal Revenue Cod e, Chapter 1 (Ogus, 1994). Advantages Shareholders have limited liabilities to the company’s debts. Thus, shareholder’s assets cannot be sold to pay the corporation’s debts in case of bankruptcy. S corporations are exempted from paying federal taxes since losses and profits are passed through shareholders tax reports Shareholders can become employees of the corporation and earn tax-free salaries The credibility associated with the business makes it possible for the business to attract high calibre employees and customers Disadvantages Formation is expensive and time consuming due to the legal and taxation formalities that the business is expected to comply with before been... It is stated in the essay that when starting a new business, it is necessary to make objective decisions concerning the structure of the proposed business. Most business owners consider the significance of financial decision over other factors that affect the business. Although credible financial decision determines the sustainability of the business, a business owner need to consider other factors that would affect the business in the long-term. The form of business ownership, that was a main focus of the essay and is a significant decision that investors ought to make before settling into their business. Sole proprietorship, partnership, C Corporation and S corporation are the basic forms of business ownership. After considering the different forms of business ownership, the researcher settled for a partnership as the most appropriate form of bushiness. The choice for partnership was determined by the pros and cons of other forms of business ownership and available finances. The re searcher also made his choice based on cost benefit analysis of running the business as a corporation or a sole proprietorship. Forming a partnership eliminated the aspect of competition that would arise if each partner decided to set his own business. This factor would give the team an opportunity to concentrate on their services and customers. The team eventually ruled out both the S and C corporations due to the rigorous legal requirements and large starting capital required for the business analyzed.