Business Administration

Tag: K-1

  • Double Taxation – Not an Issue in Small Business

    Double Taxation – Not an Issue in Small Business

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    by

    David J Hoare MSA
    in

    In the world of big business corporate earnings are taxed twice under the Internal Revenue Code. The first layer of taxation occurs with the traditional corporate income tax. The second tier of taxation happens when dividends are issued to shareholders. The shareholder pays an income tax at their personal rate. 

  • Joint Venture

    Joint Venture

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    by

    David J Hoare MSA
    in

    The average person may not realize this, but the most notable joint venture in existence today is the National Football League.  It figuratively owns every Sunday in the fall of each year.  It is an association of 32 clubs agreeing to compete with each other, i.e. engage in athletic entertainment.  Each venturer is its own…

  • Aggregate and Entity Theories of Partnership

    Aggregate and Entity Theories of Partnership

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    by

    David J Hoare MSA
    in

    A partnership is defined as an association of two or more persons to carry on as co-owners a business for profit. The premise is built around the notion that the combined power of the partners exceeds the sum of the value the partners could generate independently.

  • Owner Compensation in an S-Corporation

    Owner Compensation in an S-Corporation

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    by

    David J Hoare MSA
    in

    One of the tax attributes of an S-Corporation over other forms of tax entities is the ability to reduce the overall tax obligation. Naturally the lower the overall tax requirement the more profit generated for the owner(s). The S-Corporation allows an owner to reduce their tax responsibility via the compensation package assigned to the owner.

  • Direct Form of Compensation – Four Different Types

    Direct Form of Compensation – Four Different Types

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    by

    David J Hoare MSA
    in

    There are four different types of direct compensation for employees. These include: 1) Hourly Compensation, 2) Salaries, 3) Commissions and 4) Bonuses. There is some misinformation related to direct compensation as this subject relates to owners of a small business.

  • Limited Liability Company – Step By Step Setup

    Limited Liability Company – Step By Step Setup

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    by

    David J Hoare MSA
    in

    There is multi-step process to establish a Limited Liability Company (LLC). You must first be recognized by the state of origin and then apply to the Internal Revenue Service to identify the particular tax entity arrangement. Both recognition processes have several steps involved. This article guides the entrepreneur through each of the steps to create a Limited Liability…

  • Limited Liability Company – Introduction to Basic Principles

    Limited Liability Company – Introduction to Basic Principles

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    by

    David J Hoare MSA
    in

    The Limited Liability Company or LLC is really a fusion of two forms of business entity status. Each has unique positive attributes and legal protections.

  • At-Risk Rules – An Elementary Understanding

    At-Risk Rules – An Elementary Understanding

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    by

    David J Hoare MSA
    in

    Code Section 465 of the Internal Revenue Code defines ‘At-Risk’ as the financial value the taxpayer has in jeopardy related to the business activity the taxpayer is invested in as some form of an owner. Effectively, the taxpayer may only take losses on his tax return contingent on the loss being directly tied to invested dollars…

  • Phantom Income

    Phantom Income

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    by

    David J Hoare MSA
    in ,

    Those small businesses using partnership or S-Corporation formats issue Form K-1 to the respective owners. When income is assigned to the owner and there is no corresponding cash related to that income, then this income is referred to as ‘Phantom Income’. In effect, it is assigned income for tax purposes without the corresponding cash to pay…

  • What is an S-Corporation?

    What is an S-Corporation?

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    by

    David J Hoare MSA
    in

    Within the family of corporations, the Internal Revenue Service (IRS) grants tax free status to S-Corporations. It is strictly an IRS term.  In the IRS code, there are several subchapters pertaining to corporations; Subchapter S identifies and regulates S-Corporations. In essence, S-Corporations are a pass through entity meaning that all income, losses, credits and special deductions are…