Unit 1 - Choice of Entity - Choice of Entity Objective To...

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Choice of Entity
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Objective To compare and contrast the different entity alternatives to use in forming a business.
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Choosing a Form of Doing Business
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The Options Sole Proprietorship C corporation S-Corporation Partnership Limited Liability Company
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Sole Proprietorship The Good Simple and cheap to form One level of income tax The Bad Not a separate legal  entity from its owner. Owner remains  personally liable for all  debts of the business .
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C Corporation The Good Limited Liability Easy to transfer interests Easy to raise capital Employee benefits deductible Stock options The Bad Relatively expensive to create and maintain Relatively tax inefficient
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S corporation The Good One level of tax Liability protection The Bad Limits on the number and type of shareholders. Can only issue one class of stock.
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S Corporation The Good Limited Liability One level of tax The Bad More restrictive  ownership and  operating rules than C  Corporations.
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Partnerships 1.
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