Corporations

S Corporation
Advantages:
1.Easier to raise capital.
2.Can minimize self-employment tax and FICA tax. Profits as a shareholder are not taxed.
3.Can have the protection of limited personal liability without having to pay corporate taxes.

Disadvantages:
1.Can be costly to set up and follow corporate formalities.
2.Numerous regulations and requirements must be upheld by an S Corporation, including a limit on the number of shareholders.
3.Close scrutiny by the IRS of shareholder-employees, who must receive reasonable compensation (subject to employment taxes) before any nonwage distributions may be made to that shareholder-employee.

C Corporation
Advantages:
1.Can offer employees incentive stock plans.
2.Easier to raise capital.
3.100 percent deductible health insurance is offered for all employees, as well as group term life insurance up to a specified amount per employee.

Disadvantages:
1.Takes more time and effort to maintain.
2.Costs more to start.
3.Double taxation. Besides paying corporate income taxes, any dividends to shareholders are taxed again at the applicable tax rate.

LLC
Advantages:
1.There is no need to meet the requirements and formalities of a corporation to maintain the business status.
2.One has greater flexibility than with a corporation in allocating income to members. For example, an LLC can have various classes of interest, while an S Corporation can issue only one type of stock.
3.LLCs provide personal liability protection for members.

Disadvantages:
1.Some states do not tax partnerships but do tax limited liability companies.
2.If more than 35% of losses can be allocated to nonmanagers, the limited liability company may lose its ability to use the cash method of accounting.
3.Conversion of an existing business to limited liability company status could result in tax recognition on appreciated assets.

Frontline: Bigger than Enron

From reading the interview with Lynn Turner I have learned that she was a SEC cheif accountant from 1998 to 2001. When the 1995 tort-reform act was being debated she said the coutrny was in a unhealthy situation. Lawsuits were being litigated that did not have a real basis. She thinks that they made it too hard for investors to turn around and purse their claims in court. Turner also thinks, "the average investor is going to think that it's right that people can stand by -- especially the professionals, the experts in these cases -- can stand by and watch things happen, thereby aiding and abetting those things occuring, and think that they should go without punishment." She thinks that too. When asked if she thought the 1995 tort-reform law affected the behavior of accountants, of corporate boards, of corporate officers, of law firms, of investments banks in any way, she replied that no one likes to be sued. She also said that on the top of their minds there is without a doubt less litigation exposure.

Financial Statement Analysis

Target
(in millions)
Total Revenue: $65,357
Total Expenses: $16,622    25.4%
Net Income: $2,488           3.8%

Walmart
(in millions)
Total Revenue: $401,244
Total Expenses: $78,551    19.6%
Net Income: $13,400         3.3%

Walmarts expenses are less than Targets, but Targets net income is greater.

Article Review

Hodnett, Cynthia. "Re-Energized and Re-Inspired." On Balance Date: Nov/Dec 2009 Page:5

In this article Cyntha talks about her first AICPA Interchange Conference in Orlando, Fla. She explains what you do at the conference. She did a lot of networking, and she listened to guest speakers. One guest speaker she mentions is David M. Walker who talks about the economy. He believes the federal government over the years has "overpromised and under-delivered". He also says that politicians not longer have the trust of the public, and the federal government needs credible and kowledgeable professionals to tell the truth. At the end of the article Cynthia explains how attending the Interchange gave her a new perspective about the CPA profession.

Fiscal Period

I chose Target for my company because I like to shop there and there are many Targets across the United States.
The link for where I found the financtial statements is: http://media.corporate-ir.net/media_files/irol/65/65828/AP_Hi.pdf.
The fiscal period starts on February 1st and ends on January 31st the of every year.
I think that they end the fiscal period at the end of January because it is after Christmas and everyone has returned the items they do not want by the end of January.