Top 10 Questions – Choosing a New Business Entity

  • What property, equipment or other assets will be used by the business?
  • Will property, equipment and other business assets be purchased or will they be contributed to the new business by the owners?
  • How much money will each owner contribute to the new business venture?
  • Will the business operate at a profit or loss during the first few years? (be accurate)
  • What is the amount of estimated gross income of the business for the first few years?
  • How much net income will be retained or reinvested by the business and how much will be distributed to the business owners?
  • What are the individual income tax brackets of the business owners?
  • What are the desired salaries of any owner/employees?
  • Do the business owners plan to obtain their health insurance and other fringe benefits of employment from the business? (phones, automobiles, retirement plans, life insurance)
  • Will the new business have any employees other than owner/employees?

Each of these questions should be carefully considered before deciding on the form or type of a new business venture. Accurate financial projections are essential to this analysis.

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