Types of Business Entities

Ron: I’m only your Tax accountant, but let me give you a piece of advice. If you’re planning to start a business, you’ll want to carefully consider what type of Business entity you want to do business under.

Marcela: Is that important? My parents ran a Mom-and-pop store for 40 years and they never had to think about stuff like that.

Ron: I don’t know about your parents’ business, but opening a store these days means having to think about the Tax implications and Liability issues.

Marcela: Liability issues?

Ron: Yes. What if somebody Sues you? Without proper Safeguards, a Lawsuit could Bankrupt you and your business.

Marcela: I’d never thought of that.

Ron: You’ll probably want to consider forming a Corporation or an LLC. You’ll be a Sole proprietor, right? You’re not Going into business with someone else, are you?

Marcela: I’ll have two Partners actually.

Ron: In that case, you’ll also want to think about things like the Transferring of interests and the Duration of the entity.

Marcela: Wow, starting a business is a lot more complicated than I thought.

Ron: My advice? Get a Lawyer, and the sooner the better!

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