Business Entity Formation By: Karyn A. Riley, Esq.
Sole Proprietorship Limited Liability Company Limited Partnership S Corp C Corporation General Partnership Professional Limited Liability Company
Which One Are You? Which One Should You Be?
Factors to Consider Line of Business Partners and/or Investors Control and Management Employees/Contractors Financing/Capitalization Location of the Business Tax and liability issues
Types of Business Entities
NOT A BUSINESS ENITY
Easiest to form - requires no paperwork!
Most businesses start as a sole proprietorship
No expenses, no requirements regarding formation, not taxed separately
Sole Proprietorship Unlimited personal liability Liability Decision of the the sole proprietor Finance/ Capitalization Generally, use contractors and no employees Employees/ Contractors Unlimited Management/Control Can file on individual taxes Tax No paperwork Formation
Two or more people involved
Types of Partnerships
Governed by a partnership agreement
If not exists, the Uniform Partnership Act governs in most states
General Partnership Joint and several; Unlimited personal liability Liability Decision of the the sole proprietor Finance/ Capitalization Generally, use contractors and no employees Employees/ Contractors Flexible Management/Control Partnership does not pay tax; individuals reports share of loss or gain on personal taxes Tax
General Partnership - Formation
May be formed without formal operating agreement
Most jurisdiction require filing a Statement of Partnership that includes: