WGU D078 TASK 2 TEM1 - BUSINESS ENVIRONMENT
APPLICATIONS I: BUSINESS STRUCTURES AND LEGAL
ENVIRONMENT - LEGAL AND ETHICAL CONSIDERATIONS |
LATEST UPDATE WITH COMPLETE SOLUTIONS
D078 TASK 2 SUBMISSION
Name:
Student ID (STUID):
Task 2: Legal and Ethical Considerations
A1. Legal Entity Type 1.
A Limited Liability Company (LLC) is a newer legal entity that is hybrid in nature,
as it draws on the benefits of corporations and partnerships or sole proprietorships.
The owners, or members, share responsibility for the company’s operations as well
as decisions regarding the company. Members of an LLC enjoy personal asset
protection and limited liability like a corporation, while having the flexibility to be
taxed as a partnership or sole proprietor to avoid the double taxation of profits that
corporations experience. An LLC is a pass-through entity where the members of the
LLC report the business’s profits and losses on their personal tax returns.
Taxation:
The farmer in the scenario would declare his profits and losses on his personal
tax return. He would start with the regular IRS Form 1040 and attach a Schedule C.
Schedule C allows for detailed reporting of the income, expenses, and net
income/loss for the LLC. The farmer would be obligated to pay income tax on his
profits and would be subject to making quarterly estimated tax payments. As an
owner, the farmer will also be required to pay self-employment tax, which is the
employer portion of Social Security and Medicare tax. This is also subject to
quarterly estimated tax payments to remain compliant with the IRS. Self-employment
1
, tax is reported annually on Schedule SE, which is attached to the federal Form
1040.
2
APPLICATIONS I: BUSINESS STRUCTURES AND LEGAL
ENVIRONMENT - LEGAL AND ETHICAL CONSIDERATIONS |
LATEST UPDATE WITH COMPLETE SOLUTIONS
D078 TASK 2 SUBMISSION
Name:
Student ID (STUID):
Task 2: Legal and Ethical Considerations
A1. Legal Entity Type 1.
A Limited Liability Company (LLC) is a newer legal entity that is hybrid in nature,
as it draws on the benefits of corporations and partnerships or sole proprietorships.
The owners, or members, share responsibility for the company’s operations as well
as decisions regarding the company. Members of an LLC enjoy personal asset
protection and limited liability like a corporation, while having the flexibility to be
taxed as a partnership or sole proprietor to avoid the double taxation of profits that
corporations experience. An LLC is a pass-through entity where the members of the
LLC report the business’s profits and losses on their personal tax returns.
Taxation:
The farmer in the scenario would declare his profits and losses on his personal
tax return. He would start with the regular IRS Form 1040 and attach a Schedule C.
Schedule C allows for detailed reporting of the income, expenses, and net
income/loss for the LLC. The farmer would be obligated to pay income tax on his
profits and would be subject to making quarterly estimated tax payments. As an
owner, the farmer will also be required to pay self-employment tax, which is the
employer portion of Social Security and Medicare tax. This is also subject to
quarterly estimated tax payments to remain compliant with the IRS. Self-employment
1
, tax is reported annually on Schedule SE, which is attached to the federal Form
1040.
2
