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There are three considerations in choosing a legal structure for your venture:
Tax considerations: Some types of structure, such as limited partnership,don't pay taxes directly, but pass profits and losses directly to their owners. The owners then pay taxes based on their own tax situations.
Liability considerations: Some structures, such as corporations, protect their owners from liability arising from actions of the company or its employees throught what is known as the "corporate veil." This protection is not perfect and, in case of fraud or illegal activity, the corporate veil is pierced.
Investor considerations: The type and number of investors that you anticipate heaving for your venture is important becase some structures, such as S-corporation,limit the number of possible investors. Others, such as general partnerships, have only one class of investors, while C-corporations allow for many. The option of having more than one class of investors means you can give varying votong or economic power to different groups of investors.
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