Common Legal Entities Used for Operating a Business

Discussion Questions
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Discussion Questions
Response to question 1
For operating a business, the common legal entities include limited liability companies (LLCs), corporations, sole proprietorships, as well as general and limited partnerships. These legal entities are treated similarly and differently in terms of (i) the procedures that have to be observed in creating them; (ii) the tax laws which stipulate how they, along with their owners, would be taxed; (iii) and the legal responsibilities and rights conferred to them (Internal Revenue Service, 2014). The process used to create legal entities basically differs by the type of legal entity. Owners of businesses create corporations legally by filing articles of incorporation in the state of incorporation. LLCs are usually created by filing articles of organization in the state of an organization. Limited partnerships are organized by written agreement and business owners have to file a certificate of limited partnership in order to be recognized by the state. However, general partnerships might be created either without or with written partnership agreements, and can be created without having to file documents with the state (Internal Revenue Service, 2014).
Response to question 2
There should be a nationwide internet sales tax. Starting with the proliferation of catalog sales and currently with many online retail options, traditional storefronts are concerned that they are actually at a tax disadvantage (Bell, 2013). The physical stores collect taxes from shoppers but lose business to online retailers that usually do not collect the taxes. It is of note that failing to extend sales tax collection to online shops gives these online companies a 4% to 11% price advantage over local stores which is a considerable competitive advantage in retailing (Bell, 2013). In essence, a nationwide online sales tax will serve to level the playing field since taxing online purchases will help local business owners to compete. Moreover, nationwide internet sales tax will strengthen local and state governments by increasing tax revenue for police, schools, as well as other services.
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