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of formal business organization relate primarily to taxation and liability.

A summary of the responses by the members of the research sample to the questionnaire item related to this subproblem (questionnaire item number one) is presented in table 41, which may be found on the following page. As the data presented in the table indicate, all of the respondents indicated that a corporate form of organization had been adopted for their ventures. The great majority of the firms were organized as straight corporations, while a minority adopted the Subchapter S form, which permits the equity owners the option to be taxed as a partnership.

A total of four (40 percent) of the respondents indicated that the primary motivation underlying the formal organization decision was liability protection, while three (30 percent) indicated that the primary motivation was taxation, and three (30 percent) indicated that liability and taxation considerations contributed equally to the decision. Those respondents whose firms were organized as straight corporations, in all instances, included liability protection as either the primary or one of the two primary motivations for the choice of formal business organization, while those respondents whose firms were organized as Subchapter S corporations, in all instances, included taxation as either the primary or one of the two primary motivations for the choice of formal business organization.

Summary of Formal Business Organization Types

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Organization Type Number Proportion  

Sole proprietorship 0 0%

Partnership 0 0%

Limited partnership 0 0% ...