Travis: I see. I see. Now, I had an interesting question from one of my listeners not so long ago, and they were wondering why McDonalds uses S Corporations as opposed to C Corps or LLC's for all of their franchisees. Do you know that answer to that?
Jake: Well, I think on a genral note, I think that because McDonalds is a franchise, the actual McDonalds are owned by small business owners. Even though McDonalds the franchise is a big business, the individual McDonalds stores are msall business. So, for them, the benefits of being S corporation would help them minimize taxes and other issues.
Travis: Interesting. I wonder why they choose S Corps over LLC's then?
Jake: Well, you know one of the advantages of having an incorporation versus an LLC is that usually it's pretty easy to get investors because you're able to sell stock to raise investment and capital. And, I think one of the other, what I would see is the formality requirements that a Corporation has, it really does help to insure that all the transactions are formally authorized and accepted. And, when someone comes after you, or would go after McDonalds, they would be able to show that these are being run as a business.