Starting a New Business
 
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Just starting out in your own business venture, or deciding to incorporate or develop a partnership, but not sure what direction to go? We can help.

Our close professional relationship with attorneys and financial advisors will ensure that this will make the task less daunting, while helping you make a confident and well-informed decision in the business entity selection process.

We've setup the chart below to help you understand the variants between each. If you have any questions, don't hesitate to contact us to get some answers.

You may download, view and print a PDF version of this table; simply click here (requires Adobe Acrobat Reader)

Types of Business Entities:

Business Entity Type Ownership Personal Liability of Owners Tax Treatment Key Documents for Formation Management of the Business Capital Contributions
Sole Proprietorship One owner Unlimited personal liability for the obligations of the business Entity not taxed, as the profits and losses are passed through to the sole proprietor DBA filing Sole proprietor manages the business

Sole proprietor contributes whatever capital needed

General Partnership Unlimited number of general partners allowed Unlimited personal liability of the general partners for the obligations of the business Entity not taxed as the profits and losses are passed through to the general partners

General Partnership Agreement

Local filings if partnership holds real estate

The general partners have equal management rights, unless they agree otherwise The general partners typically contribute money or services to the partnership, and receive an interest in profits and losses
Limited Partnership Unlimited number of general and limited partners allowed Unlimited personal liability of the general partners for the business; limited partners generally have no personal liability Entity not taxed, as the profits and losses are passed through to the general and limited partners

Limited Partnership Certificate

Limited Partnership Agreement

The general partner manages the business, subject to any limitations of the Limited Partnership Agreement The general and limited partners typically contribute money or services to the limited partnership, and receive an interest in profits and losses
LLC Limited Liability Company Unlimited number of “members” allowed Generally no personal liability of the members for the obligations of the business Entity not taxed (unless chosen to be taxed), as the profits and losses are passed through to the members

Articles of Organization

Operating Agreement

The Operating Agreement sets forth how the business is to be managed -- a Manager can be designated to manage the business The members typically contribute money or services to the LLC, and receive an interest in profits and losses
S Corporation Up to 75 shareholders allowed; only one basic class of stock allowed Generally no personal liability of the shareholders for the obligations of the corporation Entity generally not taxed as the profits and losses are passed through to the shareholders (“pass-through” taxation)

Articles of Incorporation

Bylaws

Organizational Board Resolutions

Stock Certificates

Stock Ledger

IRS & State S Corporation election

Board of Directors has overall management responsibility and officers have day-to-day responsibility Shareholders typically purchase stock in the corporation, but only one class of stock is allowed
C-Corporations Unlimited number of shareholders allowed; no limit on stock classes Generally no personal liability of the shareholders for the obligations of the corporation Corporation taxed on its earnings at the corporate level and the shareholders have a further tax on any dividends distributed (“double taxation”)

Articles of Incorporation

Bylaws

Organizational Board Resolutions

Stock Certificates

Stock Ledger

Board of Directors has overall management responsibility and officers have day-to-day responsibility Shareholders typically purchase stock in the corporation, either common or preferred