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Business Name and Description on What It Does
Any household has a dozen of things that need fixing worldwide. It is clear that most people do not have time to fix them. This accumulates broken things in the houses. This inevitability provides real business opportunities for entrepreneurs. Hamilton Property Maintenance Inc. is a company born to fill this vacuum in the society of New Jersey. It intends to add life to houses by decorating and giving them a sense of satisfaction and fulfilment for the owners. Hamilton Property Management Inc. deals with remodelling of houses, renovation, designing of properties and rearranging of furniture and fixtures. This company gives homeowners ideas on what to expect from it. This will entail providing status reports and suggestions for dealing with unforeseen situations. The company works on old and new homes. It builds and finishes rooms, remodels kitchens, bathrooms, bedrooms, garages and gardens. It attains these goals by employing interior designers who specialize in space planning, client advice, architectural technologies, to make sure customers get world-class services, for instance, quality floor covering, paint, wallpaper and perfect wall lining work. It also has professionals, such as renovation contractors and skilled builders with specialized credentials, licensing and experience to do renovation and maintenance of properties services with absolute professionalism.
Company formation in New Jersey stipulates strict statutory regulations to be adhered. These rules also lay out guidance of legal taxation among other corporate legal obligations. In this case, Hamilton Property Maintenance Inc. partners must file with the New Jersey location authority to get an Organization Incorporation Article. This document is crucial in starting up a company. Its statues demand; the company should make sure it comes up with a unique business name. It should also check if another business has registered itself using that name. The rules stipulate that the name adopted by the company has either of the following words corporation, company or incorporated. These words should either be in full or abbreviated. The registration process considers registering the business name as federal and/or state trade mark. It should appoint or recruit director or directors expected to run the company. It is mandatory that all directors be of legal age of at least 18 years. It should make sure the director or directors are not residents of New Jersey, unless the certificate of incorporation or the law requires so. It should prepare and file a certificate of incorporation with the revenue division. The company expected to create bylaws that will govern its operations, hold a number of meetings regularly, make sure it issues all the first shareholders with stock certificate, get all other relevant local licenses to begin operating, find the type of taxes to remit to the government and other regulatory obligations the corporation has, and taking care of any necessary registrations. Lastly, the company should have a bank account (Willis et al, 2009).
Corporate Minimal Tax Exposure
It is essential to find a target for the company by coming up with the most appropriate capital structure that shows the company’s finances and assets through a combination of equity and debt or hybrid securities. If the company has stable sales and level assets that make satisfactory collateral for loans and has a higher growth rate than it can use debt more heavily. However, if the company has conservative management, high profitability or poor credit rating, then it may rely on equity capital to get funds. The capital structure should show the business finance term that describes portions of the company’s capital or operating money obtained through debt and equity. Debt should include loans and other types of credits repayable in the future, usually, with interest. Equity should involve selling part of the company to investors in the form of a stock. Capital structure decisions are complex and involve weighing a variety of factors (McLure, 2001).
A company's debt financing involves the following: allowing the founders to keep ownership and control the business, enabling entrepreneurs to make key strategic decisions, keeping and reinvesting company profits. The use of debt financing in a company has two advantages. First debt financing is easier to manage. This is because it lacks complex reporting that go with some form of equity banking. It is also not so expensive over its long term. On the other hand, equity financing has no obligation to repay the money, and it is more available to the concept and early stage businesses (Block, 2004).
It is mandatory that business should also have the following: an accountant to prepare accounts, according to accounting standards, and an auditor to express opinions on whether the company’s account is true and fair, his or her ability to find the company’s tax at risk. Auditors also advise companies on how to lower their tax exposure (Reed, Lajoux & Nesvold, 2007).
The above knowledge on capital structure helps Hamilton Property Maintenance Inc. lower its tax exposure by implementing the following stipulations. First, capitalizing the firm only with common stock and ensuring the share of business risk equally among the investors; cutting the corporation tax liability through bonuses by offsetting some expenses against the corporations tax liability. For example, any salaries paid to employees or directors will lower the net profit of the firm. This reduces the amount of tax the company pays. Banking on losses by taking almost unlimited capital and operating on losses to avoid scrutinizing by the Internal Revenue Service, if the company records losses are many years in a row, carrying losses backward and applying them against other tax years, allowing the real reduction in tax bills, allowing investors to borrow from and lend for their own account at the same rate as firms. This makes sure they undo any changes in the company’s capital structure, and lastly, split company incomes for the owners and ensure less auditing (Block, 2004).
Hamilton Property Maintenance Inc. tax plans taken into account after the first year of operation include: advancing payment of taxes with respect to the agreement, offsetting capital gains with losses by dumping some losing stocks, if it has capital gain, considering replacement of making investments with some comparable investments in order to create the capital loss carryover that can be used to the offset future capital at potential high rate, assuming that the preferable capital gain rates expire considering making of expenditure that qualifies 100% bonus first year of depreciation, applying a bunching strategy to miscellaneous itemized deductions, and medical expenses to help exceed the adjusted gross income thresholds and benefit from expenditures, talking to a tax advisor about the tax basis in the corporation, thus, enabling the company to deduct losses and maximize education credits, reviewing the business insurance and analyzing the need to increase the value of the policy to cover new equipment or furniture, reviewing the investment book to see, if there are any losers the company needs to sell. This is because it gives the company opportunity to offset the capital gains which were recognized during the first year of business. It also entails getting the services of an attorney to deal with state government filing fees charges for processing the company’s incorporation documents, considering limited liability protection, which means that the owners of the business are only liable for the capital they invested. Lastly, it involves balancing the tax benefits of incorporation with various business and legal needs.
Ways of Addressing Non-Liquidating Distributions
According to McLure (2001) non-liquidating distributions should not result in the company terminating a partner’s entire interest in the partnership. This was attained through the following steps: reducing the basis of the distributed assets having unrealized loss, but only to level the loss the company made, allocating any remaining basis decrease to the distributed assets in proportion to their adjusted basis, explaining the essential tax law framework which applies distribution of property from corporation to shareholder, computing the company's earning and profits. This helps in calculating the dividends payable to the shareholder. Identifying situations where the corporation deemed to have repaid to a shareholder a constructive dividend, comprehending the basic tax rules that apply to stock dividends, comprehending the different tax consequences that can arise from stock redemptions and contrasting a partial liquidation from a stock redemption, and describing the difference in tax consequences to the shareholder after receiving several properties in the distribution, and realizing that the adjustment basis exceeds the remaining basis is then allocated to the received properties, which were based on fair relative market values. In case of any unrealized appreciation or loss in the distributed property allocated to the non-distributor partners, a tax disparity for both the distributor and the non-distributor partners would be equal, but opposite amount created. Hamilton Property Maintenance Inc. should assume that the distributor’s partners outside basis are enough to absorb the distributed property basis. When a company values an asset valued again incidental to a distribution, it is the unrealized book gain or loss, not the unrealized tax gain or loss allocated among the partners. After making these first account adjustments, the distributor partner’s capital account decreased by the distributed property. This, among other things, ensures that any pre-contribution appreciation that has not been realized for task purposes is not entered into a capital account twice.
It is clear this essay has articulately found ways that Hamilton Property Maintenance Inc. can prudently minimize the amount of tax it pays to the government. It has also identified the business requirements required in starting up in New Jersey by fulfilling all the statutory requirements. Therefore, it is prudent to end this essay by stating Hamilton Property Maintenance start-up dearly entails proper capital factoring and order funding which ensures that it attains it profitability and tax obligations indices as so.