Sole Proprietorships? Partnerships? Llc? S or C Corporations? Which One Is the Best Solution?

CUNY – Queens College

ACCT 757 – Taxation of Business Entities

Professor: Steven J. Mandelkorn

Student: Wang Fang Lei

Sole Proprietorships? Partnerships? LLC? S or C Corporations?

Which One is the Best Solution?

A few years ago, my husband sets up his own computer company, focus on providing computer services to customer. Before he starts doing the business, we went to a CPA firm to get a license to legally set up the new company. After collecting some basic information of our business, the CPA, then choose a Sole Proprietorships business form for us. At that time, we don’t know that much about different kind of business form, and we don’t know that much about different tax consequences, responsibilities, and liabilities associate with all those different business forms either. A few years later, due to circumstance changed, we didn’t active participate in the business any more, however, we still keep it as a hobby. So, when I got the term paper assignment this time, an idea comes up in my mind. I want to do some research regarding variety business form, then compare the advantage and disadvantage of them. I thought this will not only fulfill the task, but also will benefit our future when we might start active conduct our business again.

From the knowledge I got from our course I now know business operations can be conducted in a number of different forms. Among the various possibilities, the most common forms are following: Sole proprietorships, Partnerships, Limited liability companies, Trusts and estates, S corporations (also called Subchapter S corporations), Regular corporations (also called Subchapter C or C corporations). For Federal income tax purposes, the distinctions among these forms of business organization are very important. Due to the characters what our business have, I will only discuss Sole proprietorships, Partnerships, LLC, and corporations, and I will compare those different forms, not in detail, but only in general to...