Type of business and business entity

Corporate losses can be passed through to the shareholders, and as the owner (and shareholder), you may be able to take the loss against income that appears on your personal return. You can have the protection of limited personal liability without having to pay corporate taxes. You can minimize self-employment tax and FICA tax. Your profits, as a shareholder, are not taxed in this manner. It’s easier to raise capital as a corporation than as a sole proprietorship or partnership.

Disadvantages
Numerous regulations and requirements must be upheld by an S Corporation, including a limit on the number of shareholders.
Like a C Corporation, it can be costly to set up and follow corporate formalities.
Close scrutiny by the IRS of shareholder-employees, who must receive reasonable compensation (subject to employment taxes) before any non wage distributions may be made to that shareholder-employee.

#3.IPO (Student Post)

Initial public offering (IPO), also referred to simply as a “public offering,” is the first sale of stock by a private company to the public. IPOs are often issued by smaller, younger companies seeking capital to expand, but can also be done by large privately-owned companies looking to become publicly traded. In an IPO, the issuer obtains the assistance of an underwriting firm, which helps it determine what type of security to issue (common or preferred), the best offering price and the time to bring it to market.  IPOs can be a risky investment. For the individual investor, it is tough to predict what the stock will do on its initial day of trading and in the near future because there is often little historical data with which to analyze the company. Also, most IPOs are of companies going through a transitory growth period, which are subject to additional uncertainty regarding their future values.

#4. Converting to Other Entity Types  (Professor Follow-up to Student Post)

Indeed a business may start as one type of entity, i.e., a sole proprietorship, but then grow and find than another type of structure is more convenient. Furthermore, a business can use different types of tax elections. For instance, a S corp is not a different type of business entity, but instead an election to be taxed as a S business.

#5. Accounting Periods and Methods  (Professor Post)

What accounting periods and methods are available to businesses?

#6. Re: Accounting Periods and Methods (Professor-up to Student Post)

annual accounting period called a tax year.”. You are correct, whether individuals or businesses, we all need to report income based on a tax year. That tax year could be a fiscal year or a calendar year. What is the difference between the two and who would be using each? Look forward to everyone’s answers to this question!