Types of Business Ownership: Choosing the Right Structure for Your Business

Bill Carmody discusses the importance of choosing the right business structure for legal and tax protection. He covers various types of business ownership, including sole proprietorships, partnerships, limited partnerships, corporations, LLCs, and cooperatives. Each type has unique implications for liability, taxation, and management. Carmody emphasizes consulting with legal and financial experts to make informed decisions that will impact the business long-term.

What is a potential consequence of not planning your business structure ahead of time?

• Increased employee satisfaction

• Improved customer service

• Legal agreements and headaches

• Higher profit margins

Which business structure involves a single person with no legal distinction between the owner and the business?

• Corporation

• Limited Liability Company

• Sole Proprietorship

• Partnership

In a limited partnership, what is the role of a limited partner?

• Manages daily operations

• Shares equal responsibility with other partners

• Invests money with limited liability

• Has unlimited liability

What is a key feature of a C Corporation?

• No taxation

• Double taxation

• Unlimited liability for shareholders

• Taxed like a partnership

How does an S Corporation differ from a C Corporation in terms of taxation?

• It is not taxed at all

• It is taxed at a higher rate

• It has double taxation

• Income flows through to shareholders

What is a characteristic of a Limited Liability Company (LLC)?

• Rigid tax structure

• Combines elements of a corporation and partnership

• Owned by a single individual

• Unlimited liability for owners

Why is it important to consult a lawyer or accountant when choosing a business structure?

• To hire more employees

• To increase marketing reach

• To ensure proper legal and tax setup

• To improve product quality