When you decide it is time to become a business owner, you have to make some key decisions about your business. One of those decisions is your business entity. There are a number of entities and each has legal, tax and practical consequences that require the advice of your CPA and / or business attorney. According to the Small Business Administration, here are definitions of each as well as additional information:
Sole Proprietorship – A sole proprietorship is the most basic type of business to establish. You alone own the company and are responsible for its assets and liabilities. Learn more about the sole proprietor structure.
Limited Liability Company – An LLC is designed to provide the limited liability features of a corporation and the tax efficiencies and operational flexibility of a partnership. Learn more about how LLCs are structured.
Cooperative – People form cooperatives to meet a collective need or to provide a service that benefits all member-owners. Learn more about how cooperatives are structured.
Corporation – A corporation is more complex and generally suggested for larger, established companies with multiple employees. Learn more about how Corporations are structured.
Partnership – There are several different types of partnerships, which depend on the nature of the arrangement and partner responsibility for the business. Learn more about how these are structured.
S Corporation – An S corporation is similar to a C corporation but you are taxed only on the personal level. Learn more about how S corporations are structured.