Question

• Billy Wildermon is a sole proprietor with a successful river-rafting business on a remote river in southern Colorado; he has three river guides, two bus drivers to drive the customers to the river and then pick them up, and two administrative assistants. He is concerned about personal liability, and wants to know what corporate form is best based on the following considerations:
  • He may want to offer some equity to some of his employees or to other investors so he can expand his operations. He also wants to reduce his taxes.
  • He has a couple of potential foreign investors and may want to support Trout Unlimited as a non-profit in some way.
  • He wants to make sure he is following the law in terms of licensing, and also wants to know what other types of protection beyond a certain business form of organization might help him as well.
  • He has heard a little bit about a ‘B’ Corporation, but knows little about it. He doesn’t want much interference with his operations or hoops to jump through – the simpler the better for now is his philosophy, although he hopes the business will grow and is open to a different form then.

Answer 1

He may want to offer some equity to some of his employees or to other investors so he can expand his operations. He also wants to reduce his taxes.

The best form of corporation for this purpose is C Corporation as it makes it easier to provide equity to employees and also to acquire outside investors by distributing shares. It also avoids double taxation.

He has a couple of potential foreign investors and may want to support Trout Unlimited as a non-profit in some way.

Nonprofit Corporation will be the best form of business for this purpose. Since the number of investors are few, a non-profit corporation structure will be beneficial as it can be treated as corporation for tax.

He wants to make sure he is following the law in terms of licensing, and also wants to know what other types of protection beyond a certain business form of organization might help him as well.

In C Corporation or corporation structure, the business will be legally justified. However, in addition to that he is also provided liability protection. For example, if the business owes money, it does not mean Billy Wildermon owes money to people.

He has heard a little bit about a ‘B’ Corporation, but knows little about it. He doesn’t want much interference with his operations or hoops to jump through – the simpler the better for now is his philosophy, although he hopes the business will grow and is open to a different form then.

B Corporation is a modified version of C Corporation where organization is focused on social benefits but at the same time the organization is for-profit. If he wants to operate his business as for-profit (instead of not-for-profit) then B Corporaiton will be suitable for Bill Wildermon