Answer:
Accountants are in a position to provide advice to business owners to determine which organization structure is best for their particular business venture. Imagine that you were approached by a friend or relative interested in starting a specialty business to design men and women clothing. Discuss the advantages and disadvantages of at least two (2) forms of business structures. Make a recommendation regarding the structure your friend or relative should use based on this particular venture. Explain your rationale.
Based on your recommendation regarding the appropriate business structure, explain the major advantages and disadvantages of the business owner with minimal accounting experience maintaining the company's books instead of…show more content…
The second business structure that I would recommend and I think would be most beneficial to both parties would be an LLC (Limited Liability Company). A limited liability company, is a new form of business organization that is certainly worth consideration. It has several features that create favorable tax treatments, as well as protection from personal liability. Since the status of the LLC form of organization varies somewhat from state to state, be certain to find out how your state's law applies. Some of the advantages of an LLC are, LLC allows for an unlimited number of members however, if the LLC has just one owner, it will be taxed as a sole proprietorship. The LLC allows for the special allocation of profits the disproportionate splitting of member profits and losses in different percentages than their respective percentages of ownership. This means that members can enjoy the benefits of receiving profits and writing off losses in excess of their individual ownership percentage. The members enjoy limited liability, which means they are personally protected from any liability of the LLC and successful judgments, as well as from the LLC itself. And just with all advantages there are always disadvantages.
