Harvard Business Review Entrepreneur's Handbook

4.

Organizing Your Company

At the onset of your new venture, you will need to address the legal form your enterprise will adopt. Should it be a sole proprietorship, a partnership, a corporation, or a limited-liability company?

This decision is driven chiefly by your objectives and those of your investors. But taxation and legal liabilities also play a part. The trade-offs built into the law can make the choice difficult; to get the most favorable tax treatment, a business must often give up some protection from liability, some flexibility, or both. This chapter outlines the choices available to the new enterprise and summarizes the advantages ...