Business Startup Facts: Types of Business Entities

If you’re thinking of starting a business, one of the fundamental matters you should decide on is your type of business structure or entity. This will determine everything from your taxes and liability concerns to the identification of your state and federal obligations. Here are a few facts about business entities that your attorney should verse you on:

Sole Proprietorship

This is one of the most basic forms of business, where full ownership of the enterprise rests only on a single individual. The sole proprietor enjoys full control over operations, as well as full reign over the profits of the business. However, the business owner also has the sole obligation over the taxes and liabilities that the business might incur.

General Partnership

As opposed to a sole proprietorship, a general partnership should be owned by two or more persons. Each partner has joint liability for all of the obligations of the business, except as otherwise provided for by law.

Limited Liability Corporation

Corporations exist separately from its owners, because it has its own legal personality. Limited liability corporations, while exercising pretty much the same rights and legal protection vested on a conventional corporation, are taxed quite differently. Many small or medium business owners choose LLC as their structure because it offers more simplicity.

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