A good friend of yours asks for your advice on whether or not to maintain his Tree Trimming Service business as a sole proprietorship or to incorporate. You interview him with and receive the following responses:
Q. Does your business face any risks?
A. Yes, I pay for liability insurance in case a tree or limb falls
and damages property or injures employees. My insurance company
says the rates are going up because more businesses of my type are
facing civil liabilities. If I ever got sued it would put me out of
business.
Q. Do you plan to raise capital for expansion?
A. I have a line of credit from the bank if I need cash.
Q. What is your tax situation?
A. This business is my only form of income, so my taxes are rather
easy to calculate.
Formulate a thoughtful response include at least one reference to an accounting principle.
A private limited or one person company can have several benefits over a proprietorship concern.
The benefits can be listed as follows :-
Since, my friend has an ongoing liability insurance, the charge of which is on the verge of rise and also is a regular in seeking bank credit/overdraft, I would suggest him to incorporate a company, owing to the benefits of incorporation listed above.
A good friend of yours asks for your advice on whether or not to maintain his...
Two college students just started new businesses. They have sought your advice on whether or not they should use cash- or accrual-basis accounting methods. You interviewed each and received the following responses: Kyle's Lawn and Care Business Do you own any equipment or capital assets? Yes, I own a truck and a riding lawn mower. Do you have any expenses? I paid cash for my truck and mower, so I don't have payments. I do make one annual payment for...
Please read the article and answer about questions. You and the Law Business and law are inseparable. For B-Money, the two predictably merged when he was negotiat- ing a deal for his tracks. At other times, the merger is unpredictable, like when your business faces an unexpected auto accident, product recall, or government regulation change. In either type of situation, when business owners know the law, they can better protect themselves and sometimes even avoid the problems completely. This chapter...