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Business Legal Structures

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Sole Proprietorship

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Features: One-person ownership, personal tax filing. Advantages: Full control, easy to establish. Disadvantages: Unlimited liability, difficult to raise capital.

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Partnership

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Features: Two or more owners, shared decision making. Advantages: Talent and resource pooling, shared responsibilities. Disadvantages: Joint liability, potential for conflict.

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Corporation

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Features: Separate legal entity, owned by shareholders. Advantages: Limited liability, easier capital accumulation. Disadvantages: Double taxation, complex regulations.

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Limited Liability Company (LLC)

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Features: Hybrid structure, limited liability protection. Advantages: Tax flexibility, reduced personal liability. Disadvantages: Variable regulations by state, potential self-employment taxes.

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S Corporation

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Features: Special IRS tax status, limited to 100 shareholders. Advantages: Pass-through taxation, limited liability. Disadvantages: Eligibility restrictions, rigorous formalities and regulations.

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C Corporation

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Features: Standard corporation, no shareholder limit. Advantages: Unlimited growth potential, enduring structure. Disadvantages: Double taxation, extensive record-keeping.

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