C Corporations, S Corporations, and LLCs

C Corporations
Benefits:
100% deductible health insurance
Corporation continues even if a stock holder dies or sells out
Easier to raise capital in a C Corporation than in a sole proprietorship or partnership
No limit to number of shareholders

Disadvantages:
Double Taxation
Takes more time and effort to maintain
Bigger risk in starting cost than a sole proprietorship or partnership

S Corporations
Benefits:
Easier to raise capital in a S Corporation than in a sole proprietorship or partnership
Protection from limited personal liabilty with the benefit of not having to pay corporate taxes
Saves corprate taxes

Disadvantages:
Bigger risk in starting cost than a sole proprietorship or partnership
Numerous regulations and requirements must be met
Owner needs to be a U.S citizen or permanent residents

Limited Liability Company (LLC)
Benefits:
Exists as a seperate intity
Can chose to be taxed as a partnership or as a corporation
No Requirements or formalaties must be met

Disadvantages:
Must have at least two people to be treated as a partnership
Bigger risk in starting cost than a sole proprietorship or partnership
Tough to change from an LLC to an S Corporation or C Corporation

Enron Takes a Life

Cliff Baxter, born in Amityville, N.Y., was a Texas millionaire. He had a $700,000 house, a 2002 Mercedes-Benz S500 sedan, a 72 ft Yacht named Tranquility, a wife and two kids. He set up a charity for kids with diabetes and cancer. He was vice chairman for Enron and helped protect his employees from Enrons cutthroat culture. He tried to do the right thing, but was dragged into the glare. He was subpoenaed to testify before Congress. He had to chose between him or his friends. The pressure was getting to him and his friends from his yacht club noticed it. After all the thought and stress, he finally chose to take his own life. He got in his $80,000 Mercedes, drove to a median strip in Sugar Land, Texas, turned the engine off, locked the doors and shot himself in the head with a .38 revolver. When he was found, there was a suicide note pointing to the problems at Enron.

It's too bad that a company can affect a person's life in such a horrible way.

Frontline: bigger than enron: congress and the account wars

I read the interview on Sarah Teslik and found out that Enron is an isolated event. You can sue Enron, but no one in the business will give you a check, Eron will. The shareholders of Enron will then take the left over money and pay it to themselves. Also, you will not put anyone in jail by sueing Enron.

Executives can use millions of money from the Enron business in stocks. This was the issue of Expensing Stock Options. The stock option turned Enron into a Ponzi scheme; a fraudelent investment operation that pays returns to seperate investors from their own money or money paid by subsequent investors, rather than from any actual profit earned.

When CEOs sell stock, they are supposed to tell the public right away. But if they know their company is going to go bankrupt, they delay revealing the fact that they are selling stocks. To get around having to tell the public, the CEO gets the company to give them a big loan. To pay it back, they return their stock as a loan repayment. In doing this, they get their cash out of the company and don't have to tell the public for over a year. This is how Enron did it and got in trouble. Enron had many people involved who kept their mouths shut to the public. This is how they got away with hiding things for so long, but in the end, they got caught.

On Balance Article Summary

The Impact of a Volunteer
By Ann Glowacki, CPA

I read the article "The Impact of a Volunteer". I learned that about 61 million people volunteered at least once between September 2005 and September 2006. Volunteering can impact your life in a way that is good for your soul, career and community. Volunteering looks good on resumes and make you a better person. When volunteering, you meet new people and learn new things you didn't already know. Volunteering doesn't mean you have to do a big project. Little things count too. Volunteering not only helps you, but also the world around us. Everyone is capable of volunteering. There are many volunteer opportunities, you just have to find one that's right for you.You don't have to volunteer every day. If you every find yourself just sitting on the couch watching TV, turn the TV off and go volunteer. Make the world a better place.

Glowacki, Ann. "The Impact of a Volunteer." On Balance Jan/Feb 2008: 16-18.

Revenue and Expenses for Toys R Us and Wal-Mart

1. List the "Total Revenue or Net Sales," "Total Expenses," and "Net Income" or "Net Loss" for each company.
Toys R Us: (in millions)           Wal-Mart: (in millions)
Net Sales: $13,568                 Net Sales: $405,046
Total Expenses: $4,106           Total Expenses: $79,607
Net Income: $304                   Net Income: $14,335

2. For each company, calculate and record the component percentages for total expenses and net income by dividing each item by the amount of net sales.  round the percentage calculations to the nearest 0.1%
Toys R Us:                       Wal-Mart:
Total Expenses: 30.3%      Total Expenses: 19.7%
Net Income: 2.2%             Net Income: 3.5%

3. Compare the component percentages for net income for each company.  Which company has the better component percentage.
Wal-Mart