Question

You are about to start your own business like a restaurant what would be the best...

You are about to start your own business like a restaurant what would be the best form of business organization (e.g.partnership, LLC, etc.) for your business and why. In discussing “why”, please include the pros and cons over all other available alternatives.

Homework Answers

Answer #1

Answer: I will choose an LLC form for starting the restaurant business as it offers the following benefits’ over the other business forms

  1. The liability towards debts is limited to the extent of investment made and hence the liability is limited unlike sole proprietorship
  2. The formalities related with formation are not as complex as formation of the corporation
  3. There are greater tax flexibilities and exemption to certain taxes as compared to the corporations
  4. There is no requirement of forming board of directors unlike the corporations
  5. It is a good vehicle for holding appreciating assets like real estate and intellectual property

But at the same time there are certain disadvantages also associated with the LLC’s like in some states there is a extra fee on the formation of LLC’s, Single member LLC has a lower asset protection and so on.

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