Chapter 8

Deciding the Legal Structure for a Business

In This Chapter

arrow Structuring the business to attract capital

arrow Taking stock of the corporate legal structure

arrow Partnering with others in business

arrow Looking out for Number One in a sole proprietorship

arrow Choosing a legal structure for income tax

The obvious reason for investing in a business rather than putting your hard-earned money in a safer type of investment is the potential for greater rewards. Note the word potential. As one of the owners of a business, you’re entitled to your fair share of the business’s profit, as are the other owners of course. At the same time you’re subject to the risk that the business could go down the tubes, taking your money with it.

Ignore the risks for a moment and look at just the rosy side of the picture: Suppose the doohickeys that your business sells become the hottest products of the year. Sales are booming, and you start looking at buying a five-bedroom mansion with an ocean view. Don’t make that ...

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