Choosing a Business Form
Choosing the proper business form is crucial. Many factors should be considered, including taxes, liability risk, tax and fiscal year-end, ownership structure, estate planning, business risks, and earnings and property distributions. The following table summarizes several important characteristics of business organizations:
* A partner’s personal liability for LLP debts is limited. Most LLPs carry insurance to protect against malpractice.
We must remember that this table is a summary, not a detailed list. Many details underlie each of these business forms, and several details differ across states. Also, state and federal laws change, and a body of law is still developing around LLCs. Business owners should look at these details and consider unique business arrangements such as organizing various parts of their businesses in different forms.
Point: The Small Business Administration provides suggestions and information on setting up the proper form for your organization—see SBA.gov.
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