IntroductionThe owner of Far Horizon is considering reviewing the way the business is structured. Currently, the company is structured as a sole proprietorship. Several alternative business structures may provide additional benefits to Far Horizon. One of Far Horizon's goals is to raise additional capital. Potential investors demanded a forty-nine percent stake in the company. In order for Far Horizon's current owner to maintain operational control of the company and be able to raise capital, four types of business organization are worth considering. Two types of corporations “C” and “S” would provide a capital-earning structure but would have substantial documentation requirements. Two types of partnerships, general and limited, offer the opportunity to maintain control of business operations but can expose the owner to significant liability. Each of the four options is described in more detail below. C-Corporation In a C-Corporation, shareholders benefit from the protection of limited liability. The shareholders' liability cannot be greater than the amount they have invested in the company. Dividends from a C corporation are taxed twice, once at the corporate level and again on the income tax of the shareholders who receive the dividends. C corporations should be able to change stock ownership and add new shareholders relatively easily. C corporations can have an unlimited number of shareholders and different classes of stock. A corporation is a legal entity separate from its shareholders. A corporation has a perpetual life, meaning that it will continue to exist regardless of the status of the corporation's shareholders. With C corporations, shareholders are separate from management. Shareholders do not have management responsibilities and management does not have ownership responsibilities. S-Corporation In an S-Corporation, shareholders enjoy the protection of limited liability. The shareholders' liability cannot be greater than the amount they have invested in the company. S corporations do not pay taxes on profits and losses at the corporate level. Profits and losses distributed to shareholders are reported on their personal income taxes. Companies should be able to change stock ownership and add new shareholders relatively easily. An S-Corporation is limited to 100 shareholders. A corporation is a legal entity separate from its shareholders. A corporation has a perpetual life, meaning it will continue to exist regardless of the life or death of the corporation's shareholders. With an S corporation, shareholders actively engage in management decisions and the day-to-day operations of the company. Companies are very involved in creating.