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23 Nov 2019

Kent and Craig, who want to start a horse-training business, spoke to an insurance agent about getting insurance to cover potential liabilities, but were told that they could not get liability insurance because of the high risk nature their proposed business. What business entities would you recommend to Kent and Craig? Why?

Dave and Cindy, who want to start a law firm, each have $1,000 to invest in the business and no personal assets and want limited liability protection and only 1 level of taxation.They want your advice on whether they should form their law firm as: 1) a general partnership; or 2) a limited liability company (LLC). What business entity would you recommend? Why?

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Elin Hessel
Elin HesselLv2
11 Mar 2019
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Related questions

Kent and Craig, who want to start a horse-training business, spoke to an insurance agent about getting insurance to cover potential liabilities, but were told that they could not get liability insurance because of the high risk nature their proposed business. What business entities would you recommend to Kent and Craig? Why?

Dave and Cindy, who want to start a law firm, each have $1,000 to invest in the business and no personal assets and want limited liability protection and only 1 level of taxation.They want your advice on whether they should form their law firm as: 1) a general partnership; or 2) a limited liability company (LLC). What business entity would you recommend? Why?

1. Can shareholders of a C corporations deduct its lossesagainst corporation's E&P passed to its shareholders asdividends (i.e. income of shareholders)?

2. When can a C (regular) corporation's corporate veil bepierced resulting in its shareholders being personally liable forcorporation’s actions?

3. How is the income of the following business entitiestaxed?

•Sole proprietorship

•C (regular) corporation

•Partnership

•Limited liability corporation (LLC)

•S corporation

4. Kent and Craig, who want to start a horse-training business,spoke to an insurance agent about getting insurance to coverpotential liabilities, but were told that they could not getliability insurance because of the high risk nature their proposedbusiness. What business entities would you recommend to Kent andCraig? Why?

Please answer all the questions above.

1. Dave and Cindy, who want to start a law firm, each have$1,000 to invest in the business and no personal assets and wantlimited liability protection and only 1 level of taxation. Theywant your advice on whether they should form their law firm as: 1)a general partnership; or 2) a limited liability corp (LLC) Whatbusiness entity would you recommend? Why?

2. Karen, who is setting up a new business, expects that her newbusiness’ income in the first year will be $10,000. If the businessis a C (regular) corporation assume it has distributed $5,000 ofits $10,000 income to Karen as a dividend. Corp’s income tax rateis 35%. Karen’s income tax rate is 30% and her dividend tax rate is20%. For federal income tax purposes, how much would be the incometaxes paid on her business’ projected income if Karen’s businesswas a C (regular) corporation or was a sole proprietorship?

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