Two people who carefully consider which American business form to use for their business can achieve nearly any combination of attributes. For example, by choosing LLP status, they can limit their liability, totally control the business, and deduct business losses on their federal income tax returns. They can do the same with an LLC or S Corporation. They will have not liability for the contracts of the business, even though they make all business decisions and make all contracts for the business. When the business becomes profitable, they can elect to have the business from taxed like a corporation and if the corporate tax rate is lower than their tax rate, they will derive tax savings by retaining earnings in the business.

• Is it right for a business owner who controls the business to escape responsibility for the businesss contracts and torts by hiding behind the cover of the business organization?
• Would you ever choose to use the partnership form when the L.L.P form is available?
• Is it ethical for a business owner to select a business form and select a tax treatment that minimizes the tax liability?