Unit 8 Preview and Introduction
Preview
This unit will cover the following topics:
- Different types of entity structures
- Ownership and Governance
- Personal Liability Exposure
- Tax Considerations
- Compensating Owners & Distributions
- Exit Strategy
Introduction
In order to run, a business needs to be able to do things. It needs to be able to transact business, for instance, enter into contracts, open a bank account, lease/own property, etc. In order for a business to be able to do things, it has to be something. It needs to be organized as some sort of entity.
Numerous entity structures are options for entrepreneurs who are starting a new company. Entity structures exist even for people who fail to choose one.
When selecting an entity structure, many factors must be weighed – there is no exact scientific or perfect answer. It’s important as a lawyer representing entrepreneurs to consider the advantages and disadvantages of possible entity structures and consider them in light of your client’s needs and goals.
This Unit will discuss the different ways to structure a business (entity choice), the types of ownership and governance for each type, and considerations that impact the decision of which entity structure to select. As an attorney being consulted by an entrepreneur, we need to be able to help the entrepreneur make a decision as to which entity structure is best suited for their business.
💡As you read through the Unit think about what information you will need from an entrepreneur to help you opine as to the best entity structure for them.