you need to create a legal structure for your small business. you would like some of the benefits enjoyed by…

you need to create a legal structure for your small business. you would like some of the benefits enjoyed by large corporations, but do not want to be taxed twice. you have four partners who will be shareholders. none of you plan to sell your ownership shares to the public, but do want to be protected from business liabilities.\nwhich legal structure should you set up for your business?\nsole proprietorship\nlimited liability company\nc-corporation\ns-corporation

you need to create a legal structure for your small business. you would like some of the benefits enjoyed by large corporations, but do not want to be taxed twice. you have four partners who will be shareholders. none of you plan to sell your ownership shares to the public, but do want to be protected from business liabilities.\nwhich legal structure should you set up for your business?\nsole proprietorship\nlimited liability company\nc-corporation\ns-corporation

Answer

Brief Explanations:

  • Sole Proprietorship: Only one owner. Here, there are four partners, so this is not suitable.
  • Limited Liability Company (LLC): While it offers liability protection, it doesn't have the corporate - like structure benefits (though it's a good option in some cases).
  • C - Corporation: Subject to double - taxation (corporate income tax and shareholder dividend tax). The user doesn't want double - taxation.
  • S - Corporation: Has corporate - like limited liability protection. Avoids double - taxation as income is passed through to shareholders (who report it on their personal tax returns). Allows for a small number of shareholders (up to 100, and here there are four). And the shares are not sold to the public.

Answer:

S - Corporation