Business Types of ownership. Type of Ownership General Funeral Service 78 %Proprietorship22 % 8...

BusinessBusiness

Types of ownershipTypes of ownership

Type of OwnershipType of Ownership

GeneralGeneral Funeral Service Funeral Service78 %78 % ProprietorshipProprietorship 22 %22 % 8 %8 % PartnershipPartnership 5 % 5 %14 %14 % CorporationCorporation 73 %73 %???? LLCLLC ????

$ Sales in the US economy $ Sales in the US economy 87 % by87 % by corporationscorporations

Who Owns?Who Owns?

ProprietorshipProprietorship one person one person

Partnership Partnership 2 or more 2 or more partnerspartners

CorporationCorporation Stockholders Stockholders

LLCLLC Members Members

Ownership issues in FSOwnership issues in FS

Multi-unit operationMulti-unit operationConglomerateConglomerateConsolidatorConsolidatorMergerMergerAcquisitionAcquisition

Funeral home / cemetery combinationFuneral home / cemetery combination

Corporations in FSCorporations in FS

Closely heldClosely held 94 %94 %

PublicPublic 6 % 6 %

Family operatedFamily operated 85 % 85 %

FranchiseFranchise

Is Is McFuneralMcFuneral or or Funeral KingFuneral King the future? the future?

What about What about Funerals – R – UsFunerals – R – Us??

NJNJ

Approx 700 FHApprox 700 FH “ “ “ “ 1685 licensees1685 licensees

(140 interns)(140 interns)

FH ownership in NJ?FH ownership in NJ?

34% multi – firm (unit) operation34% multi – firm (unit) operation

NJ multi-firm operationsNJ multi-firm operations

Ocean Co.Ocean Co. 63%63%Burlington Co.Burlington Co. 51%51%

Warren Co.Warren Co. 18%18%Gloucester Gloucester 23%23%BergenBergen 25%25%

Dual OperationDual Operation

2 or more funeral businesses operate from 2 or more funeral businesses operate from the same physical location.the same physical location.

(A type of multi-unit operation)(A type of multi-unit operation)

Requirements????Requirements????

NJ says – max 3 (and still called NJ says – max 3 (and still called dualdual))

CORPORATION TERMINOLOGYCORPORATION TERMINOLOGY

PUBLICPUBLICCLOSELY HELDCLOSELY HELDDOMESTICDOMESTICFOREIGNFOREIGNALIENALIENSub ‘S’Sub ‘S’

Public v. Closely heldPublic v. Closely held

PUBLIC - outstanding stock held by PUBLIC - outstanding stock held by large number of peoplelarge number of people

CLOSELY HELD - limited number of CLOSELY HELD - limited number of stockholders.stockholders.

DOMESTIC CorporationDOMESTIC Corporation

organized & principle organized & principle operations in state in operations in state in which it is charteredwhich it is chartered

FOREIGN CorporationFOREIGN Corporation

chartered in state different from chartered in state different from which it operateswhich it operates

ALIEN CorporationALIEN Corporation

organized in anotherorganized in another nation nation or or countrycountry

Sub S Corporation:Sub S Corporation:

creation of IRS, not creation of IRS, not corporate lawcorporate law

profits taxed as profits taxed as partnershippartnership

Requirements:Requirements:

Limited # of stockholders (100)Limited # of stockholders (100)only 1 class of stockonly 1 class of stockno nonresident alien stockholdersno nonresident alien stockholders limitations for partnerships, limitations for partnerships,

corporations, trust as stockholderscorporations, trust as stockholderscannot be subsidiarycannot be subsidiarycannot be foreign corporationcannot be foreign corporation

Partnership terminologyPartnership terminology

ACTIVEACTIVE

akaaka GENERAL GENERALLIMITEDLIMITEDSILENTSILENTSECRET SECRET DORMANTDORMANT

Partnership AgreementPartnership Agreement

To define To define

Purpose of partnershipPurpose of partnershipObligations of partnersObligations of partnersSharing of profits/losses Sharing of profits/losses Dissolution / dispute resolutionDissolution / dispute resolution

ACTIVE PARTNERACTIVE PARTNER

akaaka GENERALGENERAL PARTNER PARTNER must be at least 1 with must be at least 1 with

unlimited liabilityunlimited liabilityRESPONSIBLE FOR RESPONSIBLE FOR

OPERATIONSOPERATIONS

LIMITED PARTNERLIMITED PARTNER

PERSONAL LIABILITY LIMITED PERSONAL LIABILITY LIMITED TO VALUE OF INVESTMENT TO VALUE OF INVESTMENT (unlike general partner)(unlike general partner)

SILENT PARTNERSILENT PARTNER

INACTIVE INACTIVE Typically WITH FINANCIAL Typically WITH FINANCIAL

INTEREST only INTEREST only butbut USUALLY KNOWN TO BE USUALLY KNOWN TO BE

INVOLVED INVOLVED (i.e. identified)(i.e. identified)

SECRET PARTNERSECRET PARTNER

AN ACTIVE PARTNER WHO AN ACTIVE PARTNER WHO MAY NOT BE READILY MAY NOT BE READILY IDENTIFIABLE AS A PARTNERIDENTIFIABLE AS A PARTNER

DORMANT PARTNERDORMANT PARTNER

SILENT PARTNER SILENT PARTNER NOT GENERALLY KNOWN TO NOT GENERALLY KNOWN TO

BE INVOLVEDBE INVOLVED

Business NumbersBusiness Numbers

W-2W-210991099W-4W-4Tax Identification #Tax Identification #I-9 I-9 K-1K-1

LLC ???LLC ???

LLC – Limited Liability Co.LLC – Limited Liability Co.

newest & most dynamic a form of doing newest & most dynamic a form of doing business in worldbusiness in world

Best of both worldsBest of both worldscorporation & partnershipcorporation & partnership

LLC'sLLC's

must must notnot have more than 2 of the 4 characteristics have more than 2 of the 4 characteristics that define corporations:that define corporations:

limited liability to the extent of limited liability to the extent of assets assets

continuity of life continuity of life centralization of managementcentralization of managementfree transferability of ownership free transferability of ownership

interests. interests.

Disadvantages??Disadvantages??

must have limited life must have limited life

not to exceed 30 years.not to exceed 30 years.

no well developed body of case law or IRS no well developed body of case law or IRS rulingsrulings

Fees - examplesFees - examples

New JerseyNew JerseyProprietorship - noneProprietorship - nonePartnership – nonePartnership – noneLLC - annual registration fee $50LLC - annual registration fee $50Corporation – starts @ $500 Corporation – starts @ $500 (and goes up quickly)(and goes up quickly)

NJ TaxesNJ Taxes

Proprietorship – as personal incomeProprietorship – as personal incomePartnership – as personal income Partnership – as personal income

except IF more than 2 partners, except IF more than 2 partners, then then $150/partner$150/partner

Corporation – corporate tax + personal Corporation – corporate tax + personal income taxincome tax

LLC – taxed as partnership, LLC – taxed as partnership, unlessunless elect to elect to be taxed as corporation be taxed as corporation (Duhhh!)(Duhhh!)