BUSINESS ORGANIZATION FORM CHOICE MEMORANDUM. Law Essay

Memorandum
Shereeney's Loc Bar
To: Professor’s Name
From: Student Name
Date:
Re: Analyzing Which State-Law Business Form is Most Appropriate and the Federal Tax Regimes Appropriate for The Business
Background
Faith Turner and Dickson Turner want to register a formal business in the state of Florida. The entity will operate as a beauty salon targeting people with dreadlocks. The main services offered by the business include twisting and re-twisting hair into different styles. It will also help people to maintain and keep heir dreadlocks in a healthy and natural way. Those who want to keep dreadlocks will be able to purchase natural hair products such as shampoos and hair oils. Faith Turner and Dickson Turner are intending to create this business as a family-owned entity.
Issue
The issue under consideration in this memorandum is evaluating the most appropriate state-law business form that Shereeney's Loc Bar can be registered under in the state of Florida. Another issue that will be considered in this discussion is identifying the best federal tax regime that the business can operate under. The discussion will compare the various forms of the business, highlighting the advantages and disadvantages of each business form. Further, the discussion will include an analysis of the tax regimes in the federal system that is suitable for the business.
Discussion
In Florida, investor need to make the right decision in order to register an entity that is suitable to fits their business objectives. There are numerous considerations that can assist an individual in selecting the best option in order to run the business smoothly. The main options that investors or potential business owners can choose from include sole proprietorship, corporations, and limited liability firms. These types of business entities under the state law differ in the form of ownership requirement, taxation requirements, formation and fees require, documentation, management authority, liability, profit-sharing, and equity allocation. When considering registering a business, it is important to make the right decision. Every choice has unique financial implications and documentation that is needed to validate the business.
Sole Proprietorship
This is the simplest form of business that an individual can register while in Florida. The business requires minimal legal documents and qualifications. However, the main danger of sole proprietorship is that the owner must assume all the responsibilities and takes personal liability for any form of losses experienced. This type is usually owned by a single individual. It is worth noting that there no equity interests that affect the operation of this type of business. When an individual wants to transfer ownership, it is easier and there are very minimal legal restrictions, which is one of the major advantages of this type of business. Whenever the sole proprietorship undertakes a business using another name save that of the owner, the Florida state laws require that the entity pays a fee of $50 in order to register a fictitious name that is valid for a period of 5 years. This provision is mandated by Fla. Stat. § 865.09. Usually, the income arising from the business is usually treated as incom...