top button
Flag Notify
    Connect to us
      Facebook Login
      Site Registration

Facebook Login
Site Registration

What factors should be considered in choosing the type of business form for my business?

+1 vote
47 views
What factors should be considered in choosing the type of business form for my business?
posted Sep 12, 2017 by anonymous

Share this question
Facebook Share Button Twitter Share Button LinkedIn Share Button

1 Answer

0 votes

Tax Treatment
Double taxation is a sore point for many companies. As a C Corporation, your company’s revenue is subject to a tax from your state and federal government, but you must also pay taxes on the personal income you bring in from the company.

Ability to Raise Capital
Important for any business, how you raise capital is subject to significant regulation, depending on your chosen business entity. While C Corporations offer the largest amount of flexibility, raising capital as a partnership is subject to particularly tough rules. An S Corporation provides some of the flexibility of a C Corporation, but its number of shareholders is restricted to no more than 100.

Separation of Ownership and Management
Personal liability is a huge concern for entrepreneurs. Several entities—corporations, LLCs, and limited partnerships—separate ownership from management and thus shield the business owner from suits brought against the business (barring any action that might pierce the corporate veil).

Limited Liability Protection
Just as you do not want to be held personally liable for a lawsuit leveled against your business, it is essential that your personal assets remain shielded from potential business liabilities. This is often the principal reason for choosing to incorporate a business as a C Corporation, S Corporation, or LLC. Again, sole proprietorships and general partnerships do not offer this kind of asset protection.

Transferral of Ownership
Transferring ownership of a business is relatively simple in a C Corporation or an S Corporation, as that ownership is based wholly off of the shares held—the owner needs only to sell their stock to the new owner.
Other business entities do not offer the same ease of transfer. Partnerships must be terminated and sole proprietorships require that the business be sold in total to transfer ownership.

Ease of Formation
If you’ve read everything above and wondered why anyone would choose a sole proprietorship or partnership over a business entity that offers greater liability protection, the answer is easy: the process of formation and its maintenance is significantly simplified.

answer Sep 15, 2017 by Rupali Thakur
Contact Us
+91 9880187415
sales@queryhome.net
support@queryhome.net
#280, 3rd floor, 5th Main
6th Sector, HSR Layout
Bangalore-560102
Karnataka INDIA.
QUERY HOME
...