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Question
Jane Doe, who has substantial personal wealth and income, is considering the possibility of opening a new business in the chemical waste management field. She will be the sole owner. The business will have a relatively high degree of risk, and it is expected that the firm will incur losses for the first few years. However, the prospects for growth and positive future income look good, and Jane expects to realize substantial cash flows from dividends the firm will eventually pay out. Which of the legal forms of business organization would probably best suit her needs?
a. Proprietorship, because of ease of entry.
b. Regular corporation, because of the limited liability.
c. Partnership, if she needs additional capital.
d. S corporation, to enjoy tax advantages and gain limited liability.
e. In this situation, the various forms of organization seem equally desirable.
Answer
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