The issue of choice of entity arises with distressing regularity, every time a client wants to start a new business or a client wants to change the way of doing business. This article will address five common entities and the issues which arise in choosing those five entities:
- sole proprietorship,.
- disregard entity,
- limited liability company,
- C corporation, and
- S corporation
- Sole Proprietorship
A client can certainly operate a business as a sole proprietorship (which is not technically an entity choice), but we do no recommend it. For a modest filing fee (now $105.00 for a paper filing and $50.00 for an online filing), a client can form a limited liability company of which the client is the sole member. See the section of this article on the disregard entity (which entity is disregarded for certain taxes but not liabilities).
Reprinted with permission from The St. Louis Bar Journal, Vol. 57, No. 2, Fall 2010 (PDF)