Felicia is starting an e-commerce business. She is deciding which entity to use for the business. All ofthe following are true related to entity characteristics, except:O You don't necessarily have to create an entity to operate a business.O Cash taken out of partnerships/S-Corps by owners is generally not taxable.O Partnerships and S Corporations, generally, do not pay entity level income taxesOC Corporations pay an entity level tax and any dividends to shareholders are not taxable.

An entity is defined as something which has a separate identity or existence. It has its own…

Answered: Felicia is starting an e-commerce…

Understanding Business

12th Edition

ISBN:9781259929434

Author:William Nickels

Publisher:William Nickels

Chapter1: Taking Risks And Making Profits Within The Dynamic Business Environment

Section: Chapter Questions

Problem 1CE

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The Smith family has a very successful family tea shop that also provides wireless Internet access and live entertainment. They believe that there is a great deal of growth opportunity in such tea shops and plan to eventually expand. After meeting with their lawyers and accountants, they realize they need to change their business structure to either a corporation or a limited liability company. They understand that both have limited personal liability. Using the information in your text regarding the advantages and disadvantages of each, make a recommendation as to which you would recommend to the Smiths. Provide at least three reasons for your recommendation. Be prepared to defend your point of view.

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