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What kind of business should I do?
justinboyd101
subscriber Posts: 11
A friend and myself are opening a retail store and right now we`re trying to figure out if we want it to be a general partnership, limited partnership or an LLC. We plan on having investors so we don`t know if we need to be an LLC? Any suggestions?
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You can only be bought out if you AGREE to a price. You also have to keep a majority stake in the company to keep a controlling interest.
Like the others have said, a partnership means unlimited liability for the partners. You can be sued personally, and any debts you owe for the business must be paid back by you, even if you go out of business.
LLC and S-Corp are your best bets. The only real difference between the two is that with the S-Corp, the actual distributions must be given equally to shareholders (depending on how much shares each shareholder owns, of course) whereas with an LLC you are given a lot more flexibility to distribute profits any way you want.
For example, say you own 60% of the company and the other owner owns 40%. If you are an S-Corp, for any distributions that are paid, you MUST be paid 60% and the other owner is paid 40%. An LLC allows a lot more flexibility to the owners over what percentage is paid to each.
There is a way to get around this with an S-Corp though. Distributions have to be derived from % ownership, but the salary paid to each owner can be different.