What type of legal entity do many entrepreneurs use and why?
A)Sole Proprietorships due to the ease of initially setting up an organization.
B)C Corporation due to its accounting system and financial reporting information.
C)C Corporation due to its ability to finance with both debt and stock.
D)LLC due to its tax advantages and the limited liability aspect to owners.

Question

Quizplus · Accepted Answer

Many entrepreneurs choose to form a Limited Liability Company (LLC) because it offers tax advantages and provides limited liability protection to its owners. Unlike the sole proprietorship, an LLC is a separate legal entity, which means that its owners are not personally responsible for the company's debts and liabilities. Additionally, an LLC's tax structure allows income to be passed through to its members, avoiding the double taxation imposed on C corporations.

What Type of Legal Entity Do Many Entrepreneurs Use and Why