Question

Julio and Julie are planning to start a business providing holistic, herbal products to consumers. This is an exciting business opportunity which has considerable growth potential. Concerned, however, about assuming a personal level of responsibility for the financial outcome of the enterprise, they decide to structure the business through:

Answer 1

Julio and Julie should consider forming a Limited Liability Company (LLC) or an S corporation to protect against personal liabilities while benefiting from potential tax advantages.

Step-by-step explanation:

Julio and Julie are concerned about personal liability for their holistic, herbal products business. They have various business structures to choose from, each with its level of personal liability. A sole proprietorship would make them personally responsible for all debts and obligations, something they wish to avoid. A general partnership allows the sharing of responsibilities but still involves personal liability for business debts. Considering their concern, the ideal choice may be forming a Limited Liability Company (LLC), which offers protection against personal liabilities and allows profits and losses to pass through to their income without facing corporate taxes. An S corporation could also be an option if they are looking to have the business income passed through to their tax returns while still protecting their assets.