Final answer:
The best choice for a small business that seeks the tax benefits of a partnership with the limited liability of a corporation is the limited liability company (LLC). LLCs protect owners from personal liabilities for business debts and are not taxed as separate entities.
Step-by-step explanation:
One attractive alternative to the corporation for a small business is the limited liability company (LLC) because it combines the tax benefits of a partnership with the limited liability of a corporation. Unlike sole proprietorships or general partnerships, where personal assets can be at risk, an LLC provides its owners (often referred to as members) with protection from personal liability for the debts and obligations of the business. This means that members are not personally liable for the company's debts or liabilities beyond the amount they have invested in the LLC. Additionally, an LLC is not taxed as a separate entity; instead, all profit and losses are passed through to the members, who then report this information on their personal tax returns.
Some other business structures include sole proprietorships, which are owned and run by one individual, general partnerships, which involve two or more owners sharing the responsibility and profits, and corporations that are formal legal entities with the ability to raise capital through issuing shares.