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40 - General Principles of Financial Planning (a) One of the principal differences between an LLC and an LLP is the level of limited liability protection for the owners and the entity Each LLP partner remains liable for the malpractice of people he or she directly controls or supervises, whereas members of an LLC are not (b) An LLP, in some states, has to reregister as a limited liability partnership each time a partner dies or the entity dissolves; this may result in the LLP being more expensive than an LLC, inasmuch as ling fees in most states are per partner, not per entity (3) An LLC can elect to be taxed as a corporation, S Corporation, or sole proprietorship, but generally an LLC will elect to be taxed as a partnership One-member LLCs le Schedule C (sole proprietorship) because by de nition, one member cannot be a partnership Two or more members will le Form 1065 (Partnership Information Return) (4) An LLC is a legal entity separate from its members it owns its own assets and is liable for its debts The personal assets of LLC members generally are beyond the reach of LLC creditors or those of the members (5) LLCs also have exible ownership (some states require two members, others require only one) and capital structure, as well as centralized management (6) Disadvantages include no free transferability of ownership interests, poor tax treatment of fringe bene ts, and limited exibility in selecting a tax year Some states may not recognize one-person LLCs or permit certain lines of business to use the LLC structure 3 Corporations A S Corporations (1) An S Corporation is treated as a pass-through entity under federal income tax laws This means that S Corporation shareholders can receive business pro ts as dividends (2) An S Corporation has several general characteristics: (a) Limited owner liability (b) Free transferability of ownership interests (as long as there are no more than 75 owners) (c) Centralized management and continuity of life through stock ownership (3) Disadvantages include poor tax treatment of fringe bene ts, limited exibility in selecting a tax year, and no ability to retain income at lower current tax cost (4) S Corporations are subject to strict eligibility requirements; an S Corporation must: (a) Be a domestic corporation (b) Have no more than 75 shareholders (c) Have no shareholders other than individuals who are US citizens or resident aliens, estates, or certain types of trusts (d) Have only one class of stock (5) If requirements are not met, resulting pro ts are subject to double taxation B C Corporations (1) A C Corporation is an arti cial entity that comes into existence upon the proper ling of articles of incorporation and issuance by the state of a certi cate of incorporation (2) A number of different parties are involved with the corporation (a) Shareholders are the owners of the corporation; shareholders elect directors to oversee the corporation (b) Directors are elected by shareholders to direct the main course of the corporation.

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CallableStatement cstmt = connprepareCall( "{ CALL appendOrder("+orderId+", "+productId+", "+qty+") } "); cstmtexecute(); }

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Here's the corresponding stored procedure, coded in Oracle PL/SQL as an example:

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Sellers, too, may need protections. They must be protected against consumers who refuse to pay or who pay with bad checks, and from buyers claims that the merchandise did not arrive. They also have the right to protect against the use of their name by others, as well as to protect the use of their unique words and phrases, slogans, and Web address (trademark protection). Another seller protection applies particularly to electronic media: Sellers have legal recourse against customers who download without permission copyrighted software and/or knowledge and use it or sell it to others. Many of the ethical and global issues related to IT apply also to e-commerce. These are discussed in Appendix 1.1, in 16, and in the Ethics Primer at our Web site. Here we touch on issues particularly related to e-commerce.

CREATE OR REPLACE PROCEDURE appendOrder( a_orderId IN NUMBER, a_itemId IN NUMBER, a_qty IN NUMBER) IS item_price NUMBER; ord_date DATE; BEGIN INSERT INTO order_items (order_id, product_id, qty) VALUES (a_orderId, a_itemId, a_qty); SELECT INTO FROM WHERE order_date ord_date orders order_id = a_orderId;

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Topic 15: Characteristics and Consequences of Types of Entities - 41 (c) Of cers are chosen by the directors to run the day-to-day business of the corporation as agents for the corporation A C Corporation has several general characteristics: (a) It is a separate legal entity; the corporation is a separate person It is separate from the persons who formed the corporation or who currently own it (b) The owners have limited liability The shareholders can lose only what they invest in the corporation (what they pay or promise to pay for the stock of the corporation) (c) The corporation is taxed separately from its owners because the corporation is a new, separate entity in the eyes of the taxing authorities (d) Corporate tax rates are generally lower than individual rates for high-income individuals (e) It offers better tax treatment for owner fringe bene ts, the ability to select a tax year, and the ability to take loans from quali ed retirement plans (f) When a business intends to retain all its earnings for an inde nite period in order to nance its growth, differences in tax rates make corporations a better choice than dividend pass-through structures (g) It is able to have continuous life The corporation continues in existence even after a shareholder dies This is true even if there is only one shareholder (h) It allows its owners to transfer ownership Stock, unless restricted at issuance, is freely transferable C Corporation income is subject to double taxation (a) A dollar is earned by the corporation, which pays a tax on it at the corporate rate (b) What is left of the dollar is paid as a dividend to the shareholders, each of whom pays a tax on it at his or her individual rate (c) The solution: Keep the dollar in the corporation, avoiding taxation at the individual level, or pay the dollar to the individual as a salary, avoiding taxation at the corporate level The tax advantage of corporate tax rates on earnings accumulated by the corporation is limited somewhat by the accumulated-earnings tax (a) The accumulated earnings tax is a penalty tax designed to prevent tax avoidance through the accumulation of earnings within the corporation beyond expected needs of the business (b) The corporation can accumulate up to a minimum credit of $250,000 of earnings and pro ts without encountering any problem with the accumulated earnings tax beyond this amount, it must demonstrate to the IRS that the accumulation is for reasonable needs of the business (c) If the corporation cannot demonstrate this need, the IRS imposes the accumulated earnings tax at a rate of 386 percent (in 2002) on all accumulated taxable income A C Corporation is created by following the process of incorporation To raise capital, a C Corporation is allowed to issue stock A company will always have at least one class of stock but can also have a second class Extraordinary transactions such as merger, consolidation, or sale of all assets must have special approval A dissolution will terminate the corporation s existence It is not complete until the winding up of affairs and distribution of assets have occurred.

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SELECT price INTO item_price FROM price_history WHERE product_id = item_id AND ord_date BETWEEN valid_from AND valid_to; item_price := item_price * a_qty; UPDATE orders SET subtotal = subtotal + item_price WHERE order_id = a_orderId; END;

/* * $Id$ * howdy.c - Sample to demonstrate RCS Usage */ #include <stdio.h> int main(void) { fprintf(stdout, Howdy, Linux programmer!"); return EXIT_SUCCESS; }

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