The Miller family, who operates a musical instrument manufacturing concern, has

Question

The Miller family, who operates a musical instrument manufacturing concern, has decided to incorporate. The three members of the Miller family, Mary, Mark, and Sue, would like to become a corporation and obtain limited liability; however taxation as a corporation would be very costly for them. If possible, Mary Miller would rather be taxed as a partnership. Mark Miller is worried about the additional paperwork and meetings that a corporation would surely bring. Sue Miller does not want a large board of directors to be formed. Sue fears that the board would somehow detract from the family goals and orientation the business has always enjoyed. In light of these concerns, is there one or more business organization forms that would better suit the Miller family? Be sure to explain your choices and the reasoning behind those choices.

Explanation / Answer

Yes. A small family company when chooses to unite, form close corporation. In a close corporation, the shares are held by one shareholder. The stock will not be publicly traded. Statutes are fairly liberal toward the formation of close corporations. The board of directors could involve one individual, and the requirement of formal meetings would be removed. A close corporation could also pursue the status of a "Subchapter S” corporation. In a Subchapter S corporation, the business would be afforded limited liability and yet would be taxed as a partnership. The combination of a close and a Subchapter S corporate form would satisfy the needs and concerns of the Miller family

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