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Bill and Darlene

In: Business and Management

Submitted By Runbugg
Words 914
Pages 4
Bill and Darlene plan to go into business together. They anticipate losses in the first two or three years, which they would like to use to offset income from other sources. They also are concerned about exposing their personal assets to business liabilities. Write a short paper advising Bill and Darlene what business form you would recommend for them as they start up their business. State any assumptions you make. There are many different options for Bill and Darlene as they decide to start their business together. They also have to make some important decisions as to the type of business structure they should form. It will have an impact on how much Bill and Darlene will have to pay for taxes, the amount of paperwork necessary and the personal liability they face. The decision depends on the individual circumstances of the business owners. There are 3 primary factors that should be considered when choosing a business entity: liability, taxation and record-keeping (Entrepreneur.com).
Liability
Bill and Darlene need to determine to what extent they need to be insulated from legal liability. This can depend on the kind of business they’re planning to start. A business that has a large amount of fixed assets that require hefty investments may mean the potential first year losses will be higher than expected so it would be better to limit their personal liability for the business losses. A Limited Liability Partnership (LLP), a Limited Liability Company (LLC), or a corporation can allow them to insulate their assets in the case they are found legally liable for damages.
An LLC allows any entity to be owners but they offer more flexibility than a corporation. This is important if Bill and Darlene decide to grow their business and add more members since there are no limits for an LLC yet they still retain the tax advantages of a partnership with pass-through...

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