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Business Structure Advice Essay

712 words - 3 pages



Business Structure Advice
FIN/571
Business Structure Advice
Mr. John Owner,
In response to your email regarding starting your business there are three main forms of business structures, which are Sole Proprietorships, Corporations (S Corp, LLC) and Partnerships. The structure of these businesses differentiate based on liability, tax implications, and the type of business being evaluated when determining what structure to use. This response will also cover the disadvantages and advantages of these types of business structures to help in your decision process.
A sole proprietorship is the simplest and most common structure chosen in starting a business. It is an ...view middle of the document...

Double taxation is taxation on the corporate level and on a member’s personal level (U.S. Small Business Administration, 2014).
There are two types of corporations, S Corporation and Limited Liability Corporation. S Corporation is a Subchapter S designation from the IRS, and chartered as a corporation in the state where it is headquartered. The advantage of an S Corporation are tax savings for you and your business; business expense tax credits where some expenses that are incurred can be written off as business expenses; and independent life which allows a business to have an independent life, separate from its shareholders. A disadvantage is the requirement of scheduled director and shareholder meetings and minutes; by-laws; stock transfers; and records maintenance.
A Limited Liability Corporation (LLC) structure has the benefits of a partnership and a corporation. Advantages of an LLC are limited liability; tax, savings; and the ability to profit share. Disadvantages of an LLC are limited life that when a member leaves the business is dissolved and the members must fulfill all remaining legal and business obligations to close the business; members are self-employed; and pay self-employment tax contributions towards Medicare and...

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