THE BUSINESS TRUST AS A MEANS OF SECURING LIMITED LIABILITY

Authors

Abstract

Small investors are unwilling to risk their entire personal fortunes in one business venture, and for this reason refuse to participate in an enterprise unless they are assured that they will be free from individual liability for the obligations of the business. Such freedom from liability may be obtained by incorporation. That is the method especially provided by law and the one which most businesses adopt, but it has its disadvantages. The organization of a corporation involves heavy expenses in the form of lawyers' fees, filing fees and organization taxes. Once formed the corporation is subject to many. special taxes, franchise taxes, privilege taxes, transfer taxes, etc., which in the aggregate may total far more than the taxes levied against an individual proprietor or partnership firm doing a business of like volume. The corporation must file detailed reports (often a burden on a small or medium-sized business), and it must submit to investigation by state officers. Its purpose, its powers and its period of existence may be so restricted that the business which it is desired to pursue can not be conducted by a corporation.

Recommended Citation

THE BUSINESS TRUST AS A MEANS OF SECURING LIMITED LIABILITY, 29 Mich. L. Rev. 1052 (1931).
Available at: https://repository.law.umich.edu/mlr/vol29/iss8/7