SESSION FIVE:
BUSINESS ORGANIZATION
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entrepreneurcenter.mississippi.org
Poll #1:
(Harv: Please insert the first poll here.)
• What is your current form of business organization?
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Sole proprietorship
Partnership
S Corporation
C Corporation
LLC
I do not yet have a structure for my company
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entrepreneurcenter.mississippi.org
Principal Forms of Doing Business
Sole Proprietorship
• One person with unlimited liability.
General Partnership
• Unlimited liability for the debts of the business.
Limited Partnership
• General partners have unlimited liability but limited partner's exposure is limited to the contribution each has made.
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Principal Forms of Doing Business
Corporation
• Provides limited liability for the investors.
"S" Corporation
• Treated as a partnership for tax purposes and as a regular corporation for other purposes. Limited Liability
• Hybrid business form that combines the corporate characteristic of limited liability for owners with tax characteristics of a partnership
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entrepreneurcenter.mississippi.org
Poll #2:
• The thing that worries me most about my business structure is:
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Likelihood of being sued
Ability to pass the business on to my family
Paying too much in taxes
Not knowing who to turn to for answers
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entrepreneurcenter.mississippi.org
Filing Requirements
Partnership & LLC
Sole Proprietorship
• Files Schedule C,
Form 1040
• Files Form 1065
C Corporation
S Corporation
• Files Form 1120
• Files Form 1120S
Basis Considerations
Sole Proprietorship
• N/A
Partnership and LLC
• Profits & losses affect partner’s basis
• Partner’s basis is increased by share of p’ship liabilities
C Corporation
S Corporation
• Shareholder’s basis is not affected by corporate profits & losses
• Shareholder’s basis is increased by profits, decreased by losses, not affected by corporate liabilities
Laws That May Affect You It is best to consult with professionals?
• Filing Requirements
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entrepreneurcenter.mississippi.org
Laws That May Affect You It is best to consult with professionals?
• Capital Formation
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entrepreneurcenter.mississippi.org
Laws That May Affect You It is best to consult with professionals?
• Liability Considerations
© 2011 My Own Business, Inc. All Rights Reserved
entrepreneurcenter.mississippi.org
Laws That May Affect You It is best to consult with professionals?
• Taxation
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entrepreneurcenter.mississippi.org
Choice of Entity Chart
© 2011 My Own Business, Inc. All Rights Reserved
entrepreneurcenter.mississippi.org
TOP TEN DO’S
1. Use a "For" and "Against" list when deciding about a partner. 2. Look for partner with complementary skills. 3. Have a buy‐sell agreement. 4. Consult a lawyer when deciding form of business. 5. Protect your intellectual property rights. 6. Outsource your payroll responsibilities. 7. Establish a tax deferred pension plan. 8. Collect referrals before retaining professionals. 9. Use your attorney to maintain compliance with labor laws. 10. Join a local service organization.
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entrepreneurcenter.mississippi.org
TOP TEN DON’TS
1. Don't use a general partnership to limit your liability. 2. Don't start a corporation without a attorney. 3. Don't sell stock in a corporation without an attorney. 4. Do not fail to pay payroll tax liabilities on time. 5. Do not sign a lease without your lawyer's advice. 6. Do not start your business without retaining an accountant. 7. Don't start a business with a handshake agreement. 8. Don't become a general partner without understanding unlimited liability. 9. Don't rely on a corporation as protection from personal liabilities. 10. Don't fail to take the advice of your lawyer seriously.
© 2011 My Own Business, Inc. All Rights Reserved
entrepreneurcenter.mississippi.org
The Entrepreneur Center @ the Mississippi Development Authority
601. 359. 3593
entrepreneurcenter.mississippi.org
© 2011 My Own Business, Inc. All Rights Reserved