The choice of legal entity in which to operate a business is one of the most important initial decisions to be made. A great many further legal, tax, and accounting choices and ramifications flow from this one decision. Thus, it pays to have assistance in understanding the different choices in order to make as informed a decision as possible.
A brief summary of the choices follows:

  • Sole Proprietorship - This is the easiest legal form to establish and to terminate, and, from a tax standpoint, it is the simplest to operate. Unlimited personal liability for the owner is, however, a major drawback.
  • Partnership - In a sense, this is two or more sole-proprietors joining together to for a business enterprise. A partnership is only slightly more complicated to set up compared with a sole proprietorship. It does require an additional tax return but operationally it permits a great deal of flexibility. Again, unlimited liability of partners for partnership liabilities, and for acts of other partners makes this a problematic choice.
  • Limited Liability Company, (LLC) - This is a relatively new form of business that can be formed by one or more "members." It possesses the simplicity and flexibility of the above forms along with limited personal liability for members. Several choices are available as to the tax treatment of LLC's.
  • Corporations - A corporation is a separate legal entity formed by one or more shareholders. The setup and operation of a corporation is a little more involved, but there are great advantages to operating in the corporate form. A popular form for small businesses is the subchapter S corporation.

We can assist you in deciding which of the above entities is right for your business. Where legal counsel is needed, we can direct you to someone who will assist you in correct formation of the entity.


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