Question

you need to create a legal structure for your small business. you would like some of the benefits enjoyed by large corporations, but do not want to be taxed twice. you have four partners who will be shareholders. none of you plan to sell your ownership shares to the public, but do want to be protected from business liabilities. which legal structure should you set up for your business? s-corporation limited liability company sole proprietorship c-corporation

Explanation:

• S - Corporation:
• Limited Liability: Shareholders have limited liability, protecting their personal assets from business liabilities, which meets the requirement of being protected from business liabilities.
• Taxation: It is a pass - through entity for tax purposes. Income is taxed at the shareholder level, avoiding double - taxation (unlike C - Corporations where corporate income is taxed and then dividends are taxed again at the shareholder level).
• Ownership: Can have multiple shareholders (up to 100 in the US), and the shares are not sold to the public in this case.
• Limited Liability Company (LLC):
• Limited Liability: Also offers limited liability. But in some aspects, the corporate - like formalities (such as having a board of directors in a more traditional corporate sense) are not as strictly required as in an S - Corporation. However, the problem mentions wanting some of the benefits of large corporations (S - Corps have a more corporate - like structure in terms of shareholder rights and governance in some ways).
• Sole Proprietorship:
• Unlimited Liability: The owner has unlimited liability for business debts and obligations, which does not meet the liability protection requirement.
• Single Owner: The problem has four partners, so this is not suitable.
• C - Corporation:
• Double - Taxation: Income is taxed at the corporate level and then dividends are taxed at the shareholder level, which does not meet the no - double - taxation requirement.

Answer:

S - Corporation