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Dear John Owner,
Congratulations on your new business venture, this is both an exciting and thrilling time for you and I will be more than happy to assist with your questions regarding preparing your business plan. There are several business structures that may be beneficial for your business depending upon what would be your comfort level with risk. In your letter you describe that you are uncertain about financing and the possibility of partnering with someone. Below I will describe the different business legal structures and how each one would affect you and your business in addition to the tax repercussions of each.
Firstly, there are a number of legal bodies that can be used to operate a business. The most basic form is called Sole Proprietorship. As its name describes it, the business is solely owned by one owner which in this case would be you. This is a simple legal designation which allows you to have total control over the responsibilities and gains from the business; it gives you the power to make any changes or business decisions without relying on others. In addition, all business responsibilities are also tied to the same individual including all the risk that comes from being the responsible party for the business. The means that at any point if someone decided to sue your company for whatever reason you will be personally liable, including all personal assets and potential damages to personal credit as well. For tax purposed these can be managed in congruence with your personal expenditures which can be an advantage as personal and business deductions can be utilized to lower your taxable income and therefore pay less in taxes or receive a larger refund.
The next legal business structure is a General Partnership. This type of legal entity allows for more than two people to enter into business venture where they share the decisions and...

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