The primary consideration when deciding on which type of entity to use for your business is the degree of liability to which the owners will be exposed. Different forms of entities offer varying levels of liability protection to the owners. Conducting a business entails a high risk of lawsuits, negligence claims, and personal liability. If you don't believe this, consider the following facts:- The U.S. has 7% of the world’s population, and 94% of the world’s lawyers!
- No other country uses contingency fees as a primary reward for attorneys.
- The U.S. is the most litigious society in the world.
A secondary consideration beyond that of owner liability is taxation. Today’s business environment is subject to ever-greater complexity in tax laws. Depending on your business structure, you may be paying more than necessary in tax liabilities.- The U.S. Government provides benefits to taxpayers who are smart enough to use them.
- Some businesses pay more taxes than the law requires due to unfamiliarity with the tax code.
- The greatest tax liability can be not from what you do, but from what you don’t do.
- Incorporating a business allows the use of tax laws not otherwise available to individual tax payers.
Bottom line: Choose your business entity wisely! Click on the entity types below to read about the characteristics of each. |
