Founder
New business owners are often concerned about liability, and rightly so. Once a business begins operations, or even before it, one should consider what type of legal entity should be formed in order to protect the owner(s) from personal liability. The two most common choices are corporations and limited liability companies. There are two types of corporations: an “S” corporation, which avoids double taxation, but which has restrictions on the number and type of shareholders, and a “C” corporation, which does not contain restrictions but usually results in two layers of taxation, one at the corporate level and another at the individual level. A limited liability company is another consideration. It offers a great deal of flexibility, from both a tax and estate planning perspective. One of the primary disadvantages is the somewhat higher initial cost of forming the entity. Additionally, it may not be advisable to form a limited liability if there is only one owner, because of the less favorable tax treatment given in that instance.