Evidencia_5_summary_export_import_theory_v2.docx

Actividad de aprendizaje 15 Evidencia 5: Summary “Export-import theory” Contar con los conocimientos necesarios para realizar un proceso de exportación, requiere no solo de manejar habilidades lectoras para apropiar las normas y pasos a seguir, sino también comprender y extraer los aspectos más importantes de cada texto. Existen gran cantidad de textos referentes exportación e importación en inglés, por lo cual es necesario fortalecer las competencias en dicha lengua. Para reforzar lo mencionado, realice las siguientes actividades: 1. Lea el siguiente texto: Export-Import Theory1

Setting up the business

Whether it is a new or existing export-import business, the legal form, or structure, will determine how the business is to be conducted, its tax liability, and other important considerations. Each form of business organization has its own advantages and disadvantages, and the entrepreneur has to select the one that best fulfills the goals of the entrepreneur and the business. Selection of an appropriate business organization is a task that requires accounting and legal expertise and should be done with the advice of a competent attorney or accountant.

Ownership structure

In this section, we examine different forms of business organizations: sole proprietorships, partnerships, corporations, and limited liability companies.

1

Belay, S. (2009). Export-Import Theory, Practices, and Procedures. (2a ed.). New York: Routledge.

Sole proprietorships

A sole proprietorship is a firm owned and operated by one individual. No separate legal entity exists. There is one principal in the business who has total control over all export-import operations and who can make decisions without consulting anyone. The major advantages of sole proprietorships are as follows:

1. They are easy to organize and simple to control. Establishing an exportimport business as sole proprietorship is simple and inexpensive and requires little or no government approval. At the state level, registration of the business name is required, while at the federal level, sole proprietors need to keep accurate accounting records and attach a profit or loss statement for the business when filing individual tax returns (Schedule C, Internal Revenue Service Form 1040). They must operate on a calendar year and can use the cash or accrual method of accounting.

2. They are more flexible to manage than partnerships or corporations. The owner makes all operational and management decisions concerning the business. The owner can remove money or other assets of the business without legal or tax consequences. He or she can also easily transfer or terminate the business.

3. Sole proprietorships are subject to minimal government regulations versus other business concerns.

4. The owner of a sole proprietorship is taxed as an individual, at a rate lower than the corporate income tax rate. Losses from the export import business can be applied by the owner to offset taxable income from other sources. Sole proprietors are also allowed to establish tax exempt retirement accounts. (Harper, 1991; Cheeseman, 2006a)

The major disadvantage of running an export-import concern as a sole proprietorship is the risk of unlimited liability. The owner is personally liable for the debts and other liabilities of the business. Insurance can be bought to protect against these liabilities; however, if insurance protection is not sufficient to cover legal liability for defective products or debts, judgment creditors’ next recourse is the personal assets of the owner. Another disadvantage is that the proprietor’s access to capital is limited to personal funds plus any loans that can be obtained. In addition, very few individuals have all the necessary skills to run an export-import business, and the owner may lack certain skills. The business may also terminate upon the death or disability of the owner.

Establishing an appropriate business organization: pointers  Does the entrepreneur intend to be the sole owner of the export-import business? If not, how many people have an ownership interest?  Does the entrepreneur need additional capital and/or expertise?  What legal form provides the greatest flexibility for management?  What legal form affords the most advantageous tax treatment for the business concern and individual entrepreneurs?  Which legal structure is easy and less expensive to establish and subject to a low degree of government regulation?  How important is it to limit personal liability of owners?

o Which legal structure is the most appropriate in light of the goals and objectives of the export-import business? (Belay, 2009).

2. Elabore una lista de vocabulario sobre el texto, mínimo de 15 palabras y escriba su respectivo significado en inglés. ________________________________________________________________ Tax liability: The amount of money someone owes to tax authorities, individuals and businesses can have tax liabilities. Entrepreneur: Person who sets up a business or many of them taking on financial risks hoping for profit. Sole proprietorship: It’s when only one person acquires all the benefits and risks of running an enterprise, it is the most common and popular business structure. Partnership: is a form of business where two or more people share ownership and the responsibility for managing the company and the income or losses the business generates. Corporation: is a legal entity that is separate and distinct from its owners, they enjoy most of the rights and responsibilities that an individual possesses. Limited liability companies: is a corporate structure whereby the members of the company are not personally liable for the company’s debts or liabilities. Is a mix between a corporation and a partnership or sole proprietorship. Export- import business: is a company that facilitates trades of goods and commodities between domestic and foreign companies. Profit or loss statement: is a financial statement that summarizes the costs and expenses incurred during a specified period of time. It provides information about a company’s ability or inability to generate profit. Accrual method of accounting: is an accounting method that measures the performance and position of a company by recognizing economic events regardless of when cash transactions occur. Retirement account: is a tax-advantaged investing tool that individuals use to earmark funds for retirement savings. Unlimited liability: it involves general partners and sole proprietors who are equally responsible for debt and liabilities accrued by the business. This liability is not capped and can be paid off through the seizure of owner’s personal assets. Insurance: is a contact, represented by a policy, in which an individual or entity receives financial protection or reimbursement against losses from an insurance company. Judgment creditor: is a person or company that a court of law has decided has the legal right to receive money from another person or company.

Loan: is the money, property or other material goods given to another party in exchange for future repayment of the loan value amount, along with interest or other finance charges. Capital: financial assets, such as funds held in deposit accounts, as well as for tangible factors or production, it includes facilities like buildings used to produce and store manufactured goods.

3. El texto sugerido al inicio de esta evidencia cuenta con varios párrafos, y al interior de cada párrafo se encuentran varias ideas principales. Por favor, lea el material complementario “Identifying the main idea” para conocer cómo se puede encontrar la idea principal en un párrafo escrito en inglés. 4. Luego de analizar el material complementario, por favor escriba las ideas principales de cada párrafo, en presente simple, en inglés. No haga transcripción literal de los párrafos. A continuación, transforme la oración a presente progresivo, también en inglés. Simple Present Tense The structure of a business is the most important factor of a company and the entrepreneur has to choose the one that best suits him and the company.

There are many different ownership structures like partnerships, corporations, limited liability companies and sole proprietorships, which are companies conducted by an individual, this person is the one responsible for all operations and who makes decisions without consultation

One of the advantages of sole proprietorships is that they can be organized and controlled easily, it’s also simple and not expensive at all and they require little or no government approval.

Present Progressive Tense The most important factor of a company is choosing the structure of a business and the entrepreneur’s job is looking for the one that bests suits him and the company. Partnerships, corporations, limited liability companies and sole proprietorships are the different options you can be using for structuring the ownership of your business. Sole proprietorships are companies that are being conducted by an individual, this person is the one holding responsibility for all operations and who is going to make decisions without consulting anyone. The first advantage of sole proprietorships is that organizing and controlling them results easy, they are also simple and not expensive at all and the government approval is not needed.

The second advantage is that their management flexibility is better than in partnerships or corporations. The owner makes all the decisions and can take away money or other assets of the business without consequences, they can also transfer or close the business. The third advantage is that these types of businesses have less government regulations than the others. The fourth advantage is that the owner is taxed as a person, and the rate for an individual is lower than the corporate income tax rate and they have also de capacity to establish tax exempt retirement accounts. The main disadvantage sole proprietorships have is the risk of unlimited liability, the owner is held accountable for the debts of the business, they can buy insurance to protect against these debts but if it’s not sufficient, the debts will be paid from their personal assets. Another disadvantage is that the capital for the business has to come from personal funds and loans, the third disadvantage is that not everybody has the skills to run an import-export business. And lastly these kinds of business can be over when the owner is dead or disabled.

The second advantage is that their management flexibility is better that in partnerships or corporations. The owner is the one capable of making decisions and taking away money or other assets of the business without having any consequences, they’re also capable of transferring or closing the business. The third advantage is that these types of businesses are having less government regulations than the others. The fourth advantage is that the owner is getting taxed as a person, the rate for an individual is lower than the corporate income tax rate and they have also the capacity of establishing tax exempt retirement accounts. The main disadvantage sole proprietorships are having is the risk of unlimited liability, the owner is being held accountable for the debts of the business, to protect against these debts they are buying insurance but if it’s not sufficient, the debts are going to be paid from their personal assets. Another disadvantage is that the capital for the business is coming from personal funds and loans, the third disadvantage is that not everybody has the skills to be running an importexport business. And lastly these kinds of business are over when the owner is remaining dead or disabled.

5. Organice las ideas en un solo resumen, de manera que se conecten coherentemente, en 15 líneas. The structure of a business is an essential factor in a company and an entrepreneur has to choose the one that best suits it. There are different ownership structures that a company can implement, these are: partnerships, corporations, limited liability companies and sole proprietorships, the last one being the most interesting. Sole proprietorships are companies conducted by only one person who is responsible for all operations. This business structure has its advantages but it also has some disadvantages. The advantages include the way it can be organized and controlled, the simplicity and low expenses it handles, it doesn’t require government approval, the owner makes all the decisions and is capable of taking away money/assets of the business without consequences, the owner can transfer or close the business, it has less government regulations than the other types of businesses and the owner pays less taxes because is taxed as an individual. The disadvantages are, the risk of unlimited liability, the owner is held accountable for the debts of the company and if they’re not paid, the money will come from personal assets, capital from personal funds, not every owner have the skills required and these kinds of business can be over when the owner dies or has a disease.

Nota: para el desarrollo de esta evidencia se debe tener en cuenta el material de formación “Using simple present and progressive to export” y el material complementario asociado a esta actividad de aprendizaje. Desarrolle esta evidencia con la herramienta ofimática de su preferencia y envíe el archivo al instructor a través de la plataforma virtual de aprendizaje en formato .doc o .pdf. Pasos para enviar la evidencia: 1. 2. 3. 4.

Clic en el título de la evidencia. Clic en Examinar mi equipo y buscar el archivo previamente guardado. Dejar un comentario al instructor (opcional). Clic en Enviar.

Nota: esta evidencia es de carácter individual. Recuerde revisar la guía de aprendizaje con el fin de verificar que ha realizado todas las actividades propuestas, saber cómo desarrollarlas y entregarlas correctamente.

Criterios de evaluación Realiza resúmenes de la información relevante y detallada de un texto técnico en inglés.