Choosing the Best Business Structure

Choosing the Legal Structure of Your Business

Sole Proprietorship Partnership Limited Liability Company Corporation

Less Commonly Considered Concerns

Raising Money Regulations – Ongoing Operation Continuity Flexibility Record Keeping

Sole Proprietorship Characteristics

Easiest form of business to set up and operate Profits are taxed only once Unlimited legal liabilities Business ends with death of owner Easy to liquidate

General Partnership Definition

A partnership is any two or more individuals who contribute money, labor, and skill to a business, and who share in its profits, losses, and management.

Limited Partnership Denition

A limited partnership has one or more partners who have limited liability and no rights of management.

File Certificate of Limited Partnership with Secretary of State or other appropriate agency. Name must contain the words “Limited Partnership.”

Formation of Limited Partnership

Formation of LLC

Acquire all the necessary licenses and permits. File articles of organization with the Secretary of State. Pay filing fees. Prepare and adopt operating agreement. File all necessary reports with the Secretary of State.

Corporation Definition

Formed under state or federal law. Legally treated as an artificial person, distinct from the individuals who own it.

Easy to Set Up and Operate

No formal process required. Obtain Employer Identification Number. Obtain all necessary federal, state, and local licenses and permits. Register Assumed Name Certificate, if necessary.

Sole Proprietorship Definition

A sole proprietorship is a business owned and operated by one person for profit