Question

When choosing the form of business for Camp Bow Wow, Heidi wanted to limit her responsibility for debts or obligations the business might incur. Although the safety of the dogs was her first priority, Heidi worried that if a "camper" was injured while at Camp Bow Wow, she could be responsible for veterinary care. Additionally, Camp Bow Wow was Heidi’s main source of income, and she would be the only owner. As a result, Heidi wanted to be sure that the company’s earnings weren’t reduced through double taxation. Considering these factors, which form of business was best for Camp Bow Wow?

A Corporation
B General partnership
C Sole proprietorship
D Limited liability company (LLC)

Answer 1

A Limited Liability Company (LLC) is the ideal business structure for Camp Bow Wow considering Heidi's concerns about limited personal liability and avoidance of double taxation.

Step-by-step explanation:

Considering that Heidi wished to limit her responsibility for debts or obligations that Camp Bow Wow might incur, protect her personal assets, and avoid double taxation on the company’s earnings, the best form of business for Camp Bow Wow would be a Limited Liability Company (LLC). An LLC combines the liability protection of a corporation with the tax treatment and ease of administration of a partnership.

Unlike a sole proprietorship or general partnership, where the personal assets of the owners can be used to pay business debts, an LLC limits the owner’s liability to their investment in the company. Moreover, it avoids double taxation, as the company's profits are taxed only once, on the owner’s personal tax return, rather than at both the corporate and personal levels as in the case of a corporation.