227k views
2 votes
Jared is starting a moderate-risk business with a few investors. What would be Jared's best choice for how he registers his business?

a) Sole proprietorship
b) Partnership
c) Limited Liability Company (LLC)
d) Corporation

1 Answer

3 votes

Final answer:

Jared's best choice for registering his moderate-risk business with a few investors would be a Limited Liability Company (LLC) due to the balance of liability protection and tax advantages. Sole proprietorships and partnerships do not provide liability protection, and corporations can be more complex and involve double taxation.

Step-by-step explanation:

If Jared is starting a moderate-risk business with a few investors, his best choice for registering his business would likely be a Limited Liability Company (LLC). An LLC provides the liability protection of a corporation, which means that Jared's personal assets would generally be protected if the business were to face legal issues or debts. Moreover, an LLC offers the tax benefits of a partnership, with profits and losses being passed through to the individual members without being taxed at the company level.

A sole proprietorship would not be suitable because it offers no liability protection, and all debts and risks are personally tied to the owner. A partnership has similar disadvantages regarding personal liability. While a corporation provides liability protection, it is often more complex and costly to establish and operate, and may involve double taxation unless it is structured as an S corporation.

Considering the need for liability protection and the presence of multiple investors, an LLC seems to be the most advantageous structure for Jared's business.

User Tomas Pajonk
by
7.4k points