Tag: Partnerships

  • Business Trusts

    Business Trusts

    The common law definition of a business is an investment of capital or property by individuals which creates the means to carry on towards the goal of generating a profit. Every state recognizes different legal formats to conduct business. The simplest and most common is the sole proprietorship. Other forms include partnerships, limited liability company and of course…

  • Estimated Tax Payments – Why and How

    Estimated Tax Payments – Why and How

    In the normal taxpayer relationship with the Internal Revenue Service, the taxpayer is an employee and via withholding, taxes are paid the U.S. Government by the employer. Basically the employer pays the tax after each payroll run on behalf of all the employees and the corresponding mandated matching taxes (Social Security and Medicare). But in the small…

  • Limited Liability Company – Step By Step Setup

    Limited Liability Company – Step By Step Setup

    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…

  • Partnership Agreements – Managing, General and Limited Partners

    Partnership Agreements – Managing, General and Limited Partners

    Every partnership consists of at least two or more partners. In many partnerships, there are dozens of partners. Each partner is classed into a particular group. There are Limited Partners, General (sometimes referred to as Operating) Partners and of course somebody who is in charge – the Managing Partner. Each of these classes of partners has…

  • People, Process & Product – The Profit

    People, Process & Product – The Profit

    Marcus Lemonis is the star of a TV series show called ‘The Profit’. He helps failing business turn around and become successful operations by fixing the three core elements of every business. He refers to these elements as the 3 P’s: People, Process and Product. It is an interesting show as it falls into the same arena…

  • At-Risk Rules – An Elementary Understanding

    At-Risk Rules – An Elementary Understanding

    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

    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…

  • Dividends and Distributions – Use in the Proper Context

    Dividends and Distributions – Use in the Proper Context

    Dividends and distributions refer to the payment of cash to investors. Why are there two separate terms? Well, the term is tied back to the type of entity that makes the payment. 

  • Partnership Agreements – Terminology

    Partnership Agreements – Terminology

    Each of us has our own built in dictionary for terms we hear in our business lives. I find it fascinating that the standard business term ‘Equity’ is interpreted differently within the business world. I often interpret the term using the Internal Revenue Service definition because my background is in taxation. Lawyers use this term to mean ownership…