Do You Have The Right Business Entity?
- Date: 2008-10-06 - Word Count: 425
Share This!
When you start a business, you need a plan. Part of the plan should be your exit strategy. For many people, the ideal exit plan is to take the company public and hire professional executives to run it. To do this, you must pick the correct business entity when starting the business.
What are we referring to when discussing business entities? There are various forms you can hold a business in such as partnerships, limited partnerships, limited liability companies and corporations. Only one of these entities, however, can be taken public.
The corporation and limited liability company are by far the most popular entity choices these days. Why? Each can be used to shield the owners from problems arising from the functioning of the business. If the business gets sued, the owners do no lose their homes.
Many people think the LLC has been around for a long time. It has not. The first one was formed in the late 1970s in Wyoming. The state passed law giving rise to it to boost tax revenues and help out small businesses.
This, of course, resulted in all the other states passing similar laws, right? Actually, no. It was not until roughly ten years later when the IRS said LLCs could be taxed as partnerships that other states started paying attention.
Suddenly, the LLC looked like a super business entity. States rushed to create laws allowing for their formation. Business entity lawyers rejoiced in a golden age and small businesses actually had a business entity that worked.
This mad rush eventually resulted in some problems. People began to realize the LLC was not all it was cracked up to be. State fees could be high. One of the biggest was discovered when people tried to take their limited liability companies public.
A limited liability company is truly designed for small business situations. It is not and was never intended to be used for large entities. As a result, the owners of an LLC have percentage interests in the company. They do not own shares because there are no shares.
To take a company public, the ownership must be held in shares. Otherwise, how can the ownership be bought and sold on an exchange? This is why you see all large, publicly traded entities with shares and dividends based on shares.
Taking a company public is a way to make millions of dollars. If you have visions of doing this one day, make sure to get off on the right foot. Choose a corporation as your business entity.
What are we referring to when discussing business entities? There are various forms you can hold a business in such as partnerships, limited partnerships, limited liability companies and corporations. Only one of these entities, however, can be taken public.
The corporation and limited liability company are by far the most popular entity choices these days. Why? Each can be used to shield the owners from problems arising from the functioning of the business. If the business gets sued, the owners do no lose their homes.
Many people think the LLC has been around for a long time. It has not. The first one was formed in the late 1970s in Wyoming. The state passed law giving rise to it to boost tax revenues and help out small businesses.
This, of course, resulted in all the other states passing similar laws, right? Actually, no. It was not until roughly ten years later when the IRS said LLCs could be taxed as partnerships that other states started paying attention.
Suddenly, the LLC looked like a super business entity. States rushed to create laws allowing for their formation. Business entity lawyers rejoiced in a golden age and small businesses actually had a business entity that worked.
This mad rush eventually resulted in some problems. People began to realize the LLC was not all it was cracked up to be. State fees could be high. One of the biggest was discovered when people tried to take their limited liability companies public.
A limited liability company is truly designed for small business situations. It is not and was never intended to be used for large entities. As a result, the owners of an LLC have percentage interests in the company. They do not own shares because there are no shares.
To take a company public, the ownership must be held in shares. Otherwise, how can the ownership be bought and sold on an exchange? This is why you see all large, publicly traded entities with shares and dividends based on shares.
Taking a company public is a way to make millions of dollars. If you have visions of doing this one day, make sure to get off on the right foot. Choose a corporation as your business entity.
Related Tags: law, corporation, exit strategy, llc, business entity
Is unsecured venture capital possible? Find out at VentureCapitalInvestmentFirms.com. Your Article Search Directory : Find in Articles
Recent articles in this category:
- The Components of a Strong Direct Mail Campaign
Here is a quick list of what should go into a direct mail campaign to get great results.1. Create u - Call Centre Outsourcing- Best Way To Get Quality Rich And Cost Effective Work
Call centres have become a very important aspect of any business. Call centres are required to provi - Features of an Interactive Web Site Design
Interactive web site designs are in huge demand nowadays. Everybody wants a website that is both ap - Business, Necessary tips that will help you during the change of spark plugs of your vehicle
Spark plug is an item that is quite small in size but a vehicle cannot run without a spark plug. - Free Annual Credit Report: Access It For Your Financial Well Being
There are ample chances of making financial mistakes, particularly when you are ignorant about the i - Business, Tips how you can become a successful Copywriter
To be successful in any business, you need to master a few of the most important factors that he - The Economic Situation of the Oil
The oil and gas industry, including exploration and production, consists of about 7,000 companies w - Rail Industry - 500 Years of Transport
During the early 1820's, as Britain experienced a massive trade-boom, it became apparent that the e - Make Money Online by Selling Your Stuff
The unfortunate news is, global recession is prevalent and any thinking human being has to act now. - 5 Key Qualities Of A Good Employee
What do employers want? This is the maddening question that every job seeker is trying to answer - a
Most viewed articles in this category:
- Common Financial Problems to Avoid
One must first change their habits and not procrastinate. American Consultants Inc at offers key fi - How a Bad Hire Can Hurt Your Business
What's worse - hiring the wrong person or not hiring anyone at all? Companies can become almost des - Joel Comm Is Dr. Adsense
What is Adsense? If you are new to making money online and net marketing, you may not know what Ads - 5 Steps For A Dynamic Wealth System Online
Recipe: Opportunity + knowledge + Dynamic Wealth System + Your Action = Massive Success!!! Step 1 - Membrane Diffuser Solutions for Wastewater Treatment Systems
In the aeration basin of a typical wastewater treatment plant there are both organic and inorganic m - How to Always Pitch A Strike
As business owners, we are always working on new ways to convince people to become customers, client - How To Stop Foreclosure
Losing your house to a foreclosure can be very scary. There are times when circumstances are ou - Dyestuff Industry In India And China
World demand for dyes and organic pigments to touch $10.6 billion in 2008According to a study on dye - Another Year Hating Your Job or Loving Life?
Copyright © 2007 Mary Foley I've come to the conclusion that to be successful - really successf - Cma-cgm Case : the Series of Lawsuits Continues in Syria, Lebanon, Egypt, France, England and the United States
Damietta company case : The series of lawsuits continues in Syria, Lebanon, Egypt, France, England a
