Danita Benson FIN571 Business Structure Advice Paper Week 2

Submitted By dbenson05
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Business Structure Advice
Danita Benson
University of Phoenix
September 10, 2013
Wendy Thomas

Business Structure Advice In response to your email, it is recommended the following considerations be taken in making the final decision regarding your business structure and plan. It is recommended to start your business as a limited liability company (LLC). The LLC has a Hybrid company unit which provides members with limited liability protection from company debts and obligations (Clifford, 2013). Members of an LLC are able to divide company profits in any manner, regardless of ownership in the company. This flexibility allows the LLC to allocate profits and losses to the greatest tax benefit of the company’s members. However, a LLC is costly to form and may not be able to raise capital because it cannot issue stock as a corporation. This means an LLC may have to rely on the personal assets of its members to fund the company’s activities. Regarding a partnership, two or more individuals have the ability to collaborate. Partners can share the responsibility of managing the company and share ideas with other partners. Partners are not required to file income taxes as a business unit, in other words they can file their part of the business statement separate of profits and losses on their own tax return. On the other hand, a partnership offers no personal asset protection for partners of the business. A partner may be even liable for the negligent acts of another partner. If the partnership's business assets do not cover an obligation, a creditor may pursue a partner’s personal assets as compensation for the business debt (Clifford, 2013). Furthermore, you do have a choice of forming a Limited Partnership. This is where a company is started as general partnership; however, a person can invest resources into the business at their own risk. They will also have partial of profit of the revenue invested. The partner will