Closely-held businesses can be operated through different types of entities. The entities have different tax consequences which must be considered in connection with their formation. While most operating businesses have traditionally used the corporate form for limitation of liability purposes (generally an “S” Corporation due to the tax advantages), in recent years the Limited Liability Company has been the “entity of choice” in Maryland. Certainly, however, there are still good reasons to select the corporate form. The limited partnership form is generally utilized in the context of family enterprises where the paramount objective is to shift interests in the entity to the next generation. Still, most of these estate planning considerations can be accomplished under the limited liability company form. Importantly, recent court cases have required more careful planning when structuring these family entities. Please call us to discuss these considerations in the selection of the appropriate entity.
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