Once you decide to establish a business, the business client's first consideration will be the type of business organization to use. Legal and tax considerations will help to determine your final choice, as well as personal tax considerations and the needs of the particular business.

Many small businesses operate as a sole proprietorship. Some disadvantages include unlimited personal liability for all debts and liabilities of the business, limited ability to raise capital, and termination of the business upon the owner's death. The firm will advise the client as to whether to form an S corporation, C corporation, partnership or an LLC may be a better alternative and cover the advantages and disadvantages of the entity choice. The firm will assist the accountant and business client with determining the shareholder's taxable income and deductions and the effect of distributions. Before the entity choice is selected, the business client must weigh numerous factors. These factors include:

· Do the participants have personal assets they wish to insulate from the risks of the business?
· Do the participants want their ownership interests easily transferable?
· Will the participants allow earnings to accumulate, or will they withdraw profits as they are earned?
· Do the participants want flexibility for distributions and the allocation of income or losses?
· How in a potential incorporation of a particular business affected by state laws?