11.5 Concluding Thoughts

Most economists and public policy officials believe that the American economy is a key anchor to American society and values. Private enterprise and the profit motive allow innovation and entrepreneurship to flourish, leading to prosperity and peace. Underlying the strength of American business enterprises is a flexible and easy-to-manage legal system that allows business owners many options in choosing how to organize their operations. The sole proprietorship, which provides autonomy and ease in creation, is a dangerous form to do business because of unlimited liability. The general partnership allows business partners to do business together but similarly carries unlimited liability. The corporation provides limited liability for its owners but can be unwieldy and cumbersome to manage, with numerous technical requirements in creation and ongoing management. Limited liability entities, such as the limited liability company and limited liability partnership, provide the most flexible choice for doing business, multiple options for tax planning, and limited liability for owners.