Question

You just passed the bar and are working at a small firm in Temple, TX when a new client leaves the following voice mail that was forwarded to you from the senior partners: "Sir, I am going to be starting a business and wanted to get some advice about getting started. I have heard these ads on the radio about Legal Zoom for incorporating a business and wonder whether I should do anything special, like incorporating, or have to do anything special. I just don't really know about this stuff and wanted some expert advice about how to get started. As for my business, I'm going to be a weekend fishing guide on local lakes. I'm young single and don't have a lot of assets....mostly debt...lol. The budget's been pretty tight for me, but I think over time I can make some money doing this. I am really busy too with my full time job, so I'd like to keep the paperwork/other hassles to a minimum. Any advice would be greatly appreciated! Dave Kubiak"

The investors wish to consider only the following four business entities:

Sole Proprietorship

Limited Partnership

LLC

C Corporation

In a well-developed response (multiple paragraphs), discuss the relative advantages and disadvantages of each entity with respect to each of his stated objectives, and discuss ultimately which of the entity you would recommend for him. Address your response to him.

Answer 1

Answer:-

Sole proprietary :

Advantages :

• complete control and higher cognitive process

• No company tax payments

Disadvantages :

• Lack of capitalist support

• Personal liability for debt and obligations

Limited Partnerships

Advantages :

• Limited liability

• Maximum power

Disadvantages :

• Risk for phase transition personal assets

• Can loose standing if excessive participation is seen

LLC

Advantages :

• Limited liability

• Choice of tax regime

Disadvantages :

• Limited lifetime and operative flexibility

• Excessive paper work

Corporation

Advantages

• Flexibility to lift funds

• Only have to risk of equity, however not legal claims

Disadvantages :

• More time and cash for organising

• Excessive work for licensing and time

Out of all it's best to adopt indebtedness company mode as a result of liability is restricted and permits the individual to proportion business and select his tax which is able to scale back his price and debt overall.