Running head: RECOMMENDATIONS FOR BUSINESS ENTITY MEMO 1

Recommendations for Business Entity Memo

Name

Institutional Affiliation
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To: Jones, Ripley and Weyland Corporation

From: Senior Accountant American Tax Agencies

Date: 12/8/2019

Subject: Recommendations for Business Entity Memo

People invest in a business structure that meets the specific type of business that they wish to set

up. The form of business determines the value of income tax that the organization returns. The

selection of a business entity also depends on its legal considerations. The most common forms

of business ownership include partnership, sole proprietorship, corporation, and limited liability,

although they vary depending on the size of the organization.

A sole proprietorship form of business has its owner as the business manager and the only

employee because the company is small. Sole ownership of the business means that the owner

enjoys all the business profits while they also have to deal with debts. The filings are simple, and

there is no double taxation. In a partnership, the business is owned jointly meaning that the

owners have unlimited personal liability for the actions of the company (Burns, 2016). The

business owners, therefore, have to share the profits and expenses jointly. The joint business

owners have to report their share of the organization’s profit on their income returns on taxation.

A corporation is a legal entity in which investors gain ownership by purchasing shares of the

company’s stock. The corporation pays taxes, including corporate taxes, property taxes, sales

taxes, and use taxes, and the owners are not liable for any of the organization’s actions

(Gomtsian, 2015). The other form of business is a limited liability company that combines the

features of both partnerships and corporations, making it an ideal entity. The limited liability
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company does not provide limitations on the number of investors, and their income can flow

directly to the investors, and their investment in the organization limits their liability.

In this case, the joint venture involves three entities who seek to operate the business as a

separate legal entity. The limited liability corporation is the best choice for the joint venture

because it will allow the individuals to receive benefits that are equal to their amount of interests

(Hiller, 2013). The venture will also enable the individuals to sell their interests after two years

as per the wishes of Weyland and Ripley. The limited liability form of business will also allow

the business owners to reduce the amount of taxes paid to the Federal government because

income can be sent directly to the business owners. The corporation can also invest in a business

manager and therefore reduce the administrative burden.

References
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Burns, P. (2016). Entrepreneurship and small business. Palgrave Macmillan Limited.

Gomtsian, S. (2015). Sustainable business models and structures for Industry 4.0. Journal of

Security & Sustainability Issues, 5(2).

Hiller, J. S. (2013). The benefit corporation and corporate social responsibility. Journal of

Business Ethics, 118(2), 287-301.