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The Best Corporate Structure for a Group of Five Investors

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Submitted By opulent
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The Best Corporate Structure for a Group of Five Investors

Based on the individual preferences of the group of five investors, I am recommending the organizing of a corporate structure as the ideal form of organization to start a retailing business. More specifically a sub chapter S corporation will allow the shareholders to be treated as partners for tax purposes and retain the benefit of limited liability. The maximum number of shareholders a sub chapter S corporation can have is 75, so the 5 members are well within the requirement. The corporate structure will limit the liability of the shareholders that prefer management input in the organization. In a partnership the need to have management input would increase the liability to unlimited which is not ideal when you goal is to increase wealth. All active participants in control of the business will receive limited liability protection on projects by incorporating. In regards to tort situations, a partnership lends all partners jointly and severally liable unless in a limited partnership. Under a corporate structure liability is not distributed to members jointly and severally, only the individuals involved.

Ownership of a corporation is evidenced by a holder’s share of stock that have been issued by the corporation. Ordinary stock or common stock entitles the shareholder to one vote per share. As shareholders profits would be distributed in the form of dividends and shareholders can participate in the dissolution and the distribution of net assets after paying creditors.

The bylaws of the corporation are the rules for running the organization and will govern the activities of the shareholder, directors, and officers. They can be amended with the majority vote and are subordinate to applicable state laws. They are as follows:

I. Name 1. The name of the organization/agency/group shall be Best...

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