There are nine factors to consider when choosing the kind of business entity that suits your needs.

1.Industry - What industry will you be engaged in? Consider that some industries are heavily regulated. What licenses and permits will your business require?

2.Ownership - How many owners will you have and what will be their level of involvement in the business? Consider whether owners wish to be actively involved or want to be passive investors with limited authority, responsibility and liability. Who will the owners be - individuals or other business entities?

3.Management Structure - How will you manage the business? Consider whether all owners have a say or will you limit management participation by some owners?

4.Skills - What skills are needed to start and carry on the business that you cannot provide? Consider: Are other people available to supply those skills and will they want to own part of the business?

5.Capital Structure - What is your ability to attract capital and what is the capital structure of the business-equity or debt? Consider: How many investors will you have and to what extent will you finance your business by equity investment or borrowing?Investors and lenders may attach conditions to giving you their money, such as ownership or security interests in the business's assets. Regardless of your entity choice, a bank or other commercial lender will want your personal guarantee of the loan.

6.Personal liability - What will be your personal liability for the business's financial obligations to lenders, customers, vendors and other third parties?

7.Taxation - How will your business be taxed?

8.Transfer of Ownership - How easy will it be to transfer ownership to family members or a purchase of your business?

9.Complexity - How complex is the process of forming the entity and of remaining compliant with laws and regulations?

Read this scenario and answer the questions in each of the three sections below.

You have been with BigBiz, Inc. for several years now, in many capacities, working your way up to project manager, the last step before becoming a division manager. That is too long to wait and there is a long line ahead of you. Most of your experience has been in food services, most recently catering. You believe there is a market for an independent catering and event planning business in your region. You do not have a non-compete agreement with BigBiz, so you are free to seek business as long as you do not use BigBiz's client list or, for the next year, hire away employees who have worked under your management. You have already lined up customers and plan to expand rapidly over the next five years and grow a business that you may ultimately sell or pass on to your children. You are married with three pre-teen children. Beyond these facts, which you must include in your discussion, you may make up your own assumptions in response to the assignment questions.

With respect to your proposed business venture, complete the following three sections.

One paragraph response to each of factors 1 through 5.

1.Industry:

2.Ownership:

3.Management Structure:

4.Skills:

5.Capital Structure:

2. For each business entity option listed below, briefly answer factors 6 through 9:

Sole Proprietorship

oPersonal liability:

oTaxation:

oTransfer of Ownership:

oComplexity:

General Partnership

oPersonal liability:

oTaxation:

oTransfer of Ownership:

oComplexity:

Limited Liability Company(LLC)

oPersonal liability:

oTaxation:

oTransfer of Ownership:

oComplexity:

"Subchapter C" Corporation

oPersonal liability:

oTaxation:

oTransfer of Ownership:

oComplexity:

"Subchapter S" Corporation

oPersonal liability:

oTaxation:

oTransfer of Ownership:

oComplexity:

3. one paragraph, your choice of business entity, with a brief summary of the reasons you chose it