There are a number different business entity forms. People who are considering forming a business, or want to change the form of their existing business, often try to cut through the confusion by asking: “Which business entity is the best one?” The bad news is that there is no business entity that will be “best” in each and every situation. The good news is that there is usually one or more business entity types that will best meet the unique needs of each client.
Imagine a potential car buyer asking “What is the best type of car to buy?” The responses to this question would probably not be contradictory and not very useful because it is the wrong question to ask. Rather to get good advice a potential car buyer would need to ask “What is the best car for me given my preferences about affordability, driving usage, preferred size, performance, and fuel economy?” The situation is very similar when it comes to business entities. The brief discussion of each entity type below is intended to provide the business person with basic understanding of each entity type, and to be used as a springboard for attorney-client discussions about which business entity will best meet the client’s unique needs.