Business Entity Matrix

Essay by raet1University, Bachelor'sB+, May 2009

download word file, 5 pages 0.0

One will be starting a business that sells pet treadmills. Initial market research shows a potential for high demand in affluent areas and cities with severe weather. There is a foreseeable lucrative international market and franchise opportunities. The two options for capital are: to use one's inheritance, which includes a multimillion-dollar home or allow one's rich friends to join the business. The plan is to use traditional marketing and sales methods as well as e-commerce.

The type of business entity that one would form would be a corporation. The reason for choosing a corporation would be that the shareholders are not personally liable for the debts of the corporation, the ownership of the corporation is easily transferable through the sale of stock, the corporation has an unlimited life extending beyond the illness or death of the owners, the tax benefits such as insurance, travel and qualified retirement plans are deductible and additional capital can be easily raised through the sale of stock in the corporation (bizfilings, 2007).

The specific liabilities of a corporation are the possibility of double taxation and the shareholders investment within the company.

Benefits of Using Independent ContractorsYou will probably save money.

Even though most employers pay ICs more per hour than they would pay employees to do the same work, it usually ends up costing employers more to hire employees. When you hire an employee, you will have to pay a number of expenses that you don't have to pay for ICs, including the cost of employer-provided benefits, office space, and equipment. You will also have to make required payments and contributions on behalf of your employees, including:•your share of the employee's Social Security and Medicare taxes, which comes to 7.65% of the employee's total compensation•state unemployment compensation insurance, and•workers' compensation insurance.

All together, these...