Question

One of your clients, a real estate agent, has contacted you for guidance on selecting an entity for a real estate agency. Using the CSU-Global Campus Library, (Links to an external site.)Links to an external site. select an article involving the different business forms, namely, sole proprietorships, partnerships, LLCs, C corporations, and S corporations. Provide an analysis of at least two business forms and include reasons to support your recommendation. Make sure you select resources that are different from your classmates.​

Answer 1

Analysis of two business forms is as follows:

Corporation:

One of the most versatile and most comprehensive structures of business is Corporations. But this is also one of the most complex structures to manage as there are more regulations and tax requirements to manage.

Corporations are incorporated as per the regulations of the laws and most importantly, have a separate legal identity.

Being formed as a corporation will help the real estate agency to manage its various projects in a better manner, also real estate business includes various high amount liabilities and payments which might turn out to be unachievable. In that case, the limited liability will help the real estate agency save selling off their personal assets.

Also, doing real estate business under a corporation will decrease the tax burden as the same will be covered under business instead of capital gains.

Partnership / LLC

The partnership is conducted where two or more persons are involved in the business. In this form of business, two persons contribute some capital in the business and conduct their business. Each partner pays tax on their share in the profit of partnership. However, no benefit of separate legal identity is available here i.e. partners shall be personally liable in case of any event of nonpayment.

LLC or Limite Liability Company is a newer concept where the basic structure is same as of a partnership, however, it was given limited liability benefit and provides flexibility whenever any new partner is to be entered. In case the real estate entity wants to expand. LLC also involves less regulatory requirements than a corporation.