Question

John is a 37 year old married business owner. He runs a dry cleaning service with 3 locations in Toledo, Ohio. His personal obligations are the home he owns with his wife, who works for a large consulting firm, the healthcare of his family and his commitment toward saving for his three children’s college educations. John knows that two of his locations require a large cash infusion to pay for new equipment. Although his wife’s job provides the family health insurance, it also places the family in a higher income tax bracket. John would like to minimize his taxes and protect his family. What form of ownership would you suggest for him? Why?

Answer 1

Answer: Limited liability company

Step-by-step explanation:

Based on the information given in the question, I'll tell Joji to consider a limited liability company. A limited liability company simply refers to a private company whereby in the case if a liability, the owners are only legally responsible to the debt based on the amount that they contributed.

Since John would like to minimize his taxes and protect his family, the limited liability company should be chosen as he will be taxed just exactly like a sole trader and his assets will be protected as well.