Choosing a Business Form 259company offer a variety of employee benefits, which our principals would wish
to exclude from their taxable income? Is the company likely to generate more
profit than can be distributed in the form of “reasonable” compensation, thus
calling for the elimination of the corporate-level tax. If these factors seem to
favor a tax pass-through entity, the principals will likely analyze the choice be-
tween subchapter S and LLC in a manner similar to Phil. In addition, they may
find the LLC’s lack of eligibility rules attractive in the short run should they
ever consider the possibility of corporate or foreign investors, or creative divi-
sions of equity.
CONCLUSION
These and the many other factors described in this chapter deserve careful
consideration by the thousands of entrepreneurs forming businesses every
month. After the basic decision to start a new business itself, the choice of the
appropriate form for the business may well be the most significant decision
facing the entrepreneur in the short run.
FOR FURTHER READING
Bischoff, William,Choosing the Right Business Entity(New York: Harcour t Brace,
1997).
Burstiner, Ir v ing, The Small Business Handbook: A Comprehensive Guide to Star ting
and Running Your Own Business(New Jersey: Fireside, 1997).
Diamond, Michael R., How to Incorporate(New York: John Wiley, 1996).
Pressment, Stanley, Choice of Business Entity Answer Book(Gaithersburg, MD:
Aspen, 1998).
Shenkman, Martin M., Star ting a Limited Liability Company(New York: John Wiley,
1996).
INTERNET LINKS
http://www.tannedfeet.com
/choice_of_entity.htm Entrepreneurs’ Help Page
http://www.smallbiz.findlaw.com
/book /su_structures/articles/01.html Findlaw Small Business Center
http://www.lexspace.com/html Lexspace-Business Entity
/formation.html Formation