What Form of Ownership Is Best?
By Jack R. Fay In Brief Factors to Be Considered From an income tax viewpoint, there are six principal forms of business enterprises: sole proprietorship, partnership, regular corporation, subchapter S corporation, limited liability partnership, and limited liability company. The selection of the form of business enterprise requires consideration of both tax and nontax considerations such as legal, economic, and personal factors. The article discusses the advantages and disadvantages of the sole proprietorship, partnership, and regular or C corporation. In addition to showing both the advantages and disadvantages, it provides some additional background information on S corporations, limited liability partnerships, and limited liability companies. An exhibit contains a summary of the tax and nontax factors that should be considered in determining the type of business in which to operate. One of the first major problems in the establishment of a business organization is choosing the best
