ECON 0110 Lecture Notes - Retained Earnings, Double Taxation, Tax Rate
Document Summary
The three most important legal forms of business enterprise. The business owners are personally liable for all business debts. You sue a corporation as a separate legal entity. Example: suppose you own stock in united airlines. Suppose united airlines borrowed billion to buy some new planes. Suppose united airlines was unable to repay the lenders. The lenders would sue united airlines as a separate legal entity. The lenders could take possession of all the assets owned by united airlines, but the lenders could not sue you individually as a part owner and the lenders could not take possession of any of your individual assets. Sales revenue business expenses = business profits. Business profits are taxed as wage income on your individual income tax return. Sales revenue business expenses = before tax profits. Before tax profits corporate taxes = after tax profits. After tax profits = retained earnings + dividends.
