Emily wants to open a chain of hair styling salons and hopes to attract investors to help finance growth. She considered forming a C corporation, but wants to have more flexibility about how the new business will be taxed. She also wants to offer investors/owners limited liability. Emily can satisfy her objectives by setting up a(n):
A) limited liability company.
B) S corporation.
C) alien corporation.
D) general partnership.

Question

Quizplus · Accepted Answer

A limited liability company (LLC) would offer Emily the flexibility in taxation as she desires, as LLCs can choose to be taxed as a partnership, S corporation, or disregarded entity. Additionally, an LLC would provide limited liability for its owners/members, which would satisfy Emily's desire to offer investors/owners limited liability. A C corporation would not provide the tax flexibility that Emily wants, and a general partnership would not provide limited liability protection. An alien corporation is a foreign corporation doing business in the United States, and is not relevant to Emily's situation.

Emily Wants to Open a Chain of Hair Styling Salons