The McGee Cake Company: A Case Study
CASE STUDY 2
The McGee Cake Company, owned by Doc and Lyn McGee, has been a sole proprietorship company since its inception in 2005 (Ross, Westerfield & Jordan, 2013, p. 18). A sole proprietorship “is the least regulated form of organization” and has allowed the McGee's to run their company …show more content…
In terms of taxes the McGee's currently report their personal and business taxes as one. Under a limited liability company they will no longer be able to claim their business income on their personal filings; separate tax returns would have to be filed for both their personal income and their business income (Cromwell, n.d., n.p.). Moreover, the McGee's would have to file documentation with the state prior to their company being able to claim limited liability status. The taxes and state filing issues, in my professional opinion, should not be viewed as detractors. The benefits the company will reap (e.g., ability to raise capital) certainly outweigh the annual taxation preparation and filing with the state to 'establish' the limited liability company.
CASE STUDY 5
Advantages and Disadvantages of Changing from a Sole Proprietorship to a Corporation Some of the advantages of forming a corporation are, in contrast to sole proprietorship, “owner-ship [of a corporation] can be readily transferred” (Ross, Westerfield & Jordan, 2013, pp. 5-6). Also, like a limited liability company, a corporation has “limited liability for the company's debts and [stockholders] can only lose what they have invested” (Ross,