Types of Business Structures
Sole Proprietorship
A sole proprietorship is a type of business entity that is owned and operated by a single individual. Unlike other business structures, such as corporations and partnerships, a sole proprietorship is not a separate legal entity from its owner. This means that the owner is personally liable for all debts and obligations incurred by the business. Sole proprietorships are the most common type of business in the United States, and they can be formed relatively easily and with little cost. However, because the owner is personally liable for business debts, sole proprietorships may not be the best choice for businesses with a high risk of liability.
Partnerships
A business partnership is an arrangement between two or more people to run a business together. Partnerships can be either general or limited, and each type has its own advantages and disadvantages. General partnerships are the simplest form of business partnership, and they are relatively easy to set up. However, each partner is personally responsible for the debts and liabilities of the business, which can be a major downside. Limited partnerships offer some protection from personal liability, but they tend to be more complex and expensive to set up. Ultimately, the best business partnership for your needs will depend on a number of factors, including the size and nature of your business and your personal goals and objectives.
Corporation
A corporation is a business entity that is separate from its owners in the eyes of the law. This means that the business can be held liable for debts and obligations, and its owners cannot be held personally responsible. The main advantage of incorporation is that it provides limited liability protection for the business's owners. This means that if the business is sued or goes into debt, the owners' personal assets will not be at risk. In addition, a corporation can raise capital by selling stock, which is something that most unincorporated businesses cannot do. Finally, corporations often have an easier time obtaining business licenses and permits than unincorporated businesses.
Limited Liability Company (LLC)
A limited liability company (LLC) is a business structure that combines the personal asset protection of a corporation with the flexibility and tax advantages of a partnership. LLCs are formed by filing Articles of Organization with the Secretary of State in the state where the business will be conducted. In addition to providing personal asset protection, LLCs offer many other benefits, including pass-through taxation, flexibility in management, and the ability to raise capital more easily than sole proprietorships or partnerships. As a result, LLCs have become one of the most popular business structures for small businesses and entrepreneurs.
Series Limited Liability Company (series LLC)
A series limited liability company (LLC) is a business entity that offers the limited liability benefits of a traditional LLC while allowing for the creation of separate, legally protected divisions, or "series." Series LLCs are primarily used to shield business owners from personal liability for debts and liabilities incurred by one series within the overall LLC.
This business structure is particularly popular among real estate investors, who can use it to isolate each property in a separate series. While series LLCs are not available in all states, they offer a flexible and versatile business solution for businesses operating in states that allow them.
Let Our Firm Guide You Through This Process
If you’re looking for experienced legal representation to help you form your business entity, our firm is here to help. We have a team of skilled attorneys who can assist you in choosing the right business structure and filing all the necessary paperwork. Let us take some of the burden off your shoulders so you can focus on growing your business.
Contact us today for a consultation, and we’ll get started on creating a plan that will protect your interests and help your business thrive. Call (409) 204-0895 or contact us online.
