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There are several forms of business entities you can choose from to organize your venture. This section contains brief descriptions of the most popular ones.
  • Corporation
  • Limited Liability Company (LLC)
  • Partnership
Corporation
The most popular types of corporations used in the USA are the "C"- Corporation, "S" - Corporation and Non-profit Corporation.
C-Corporation is the most commonly used type of corporations suitable for businesses of any size. C-Corporations can have any number of shareholders. Shareholder's assets protected from the creditors of the corporation since the liability of the shareholders is limited to the amount contributed by them to the capital of the Corporation.

The only disadvantage of C-Corporations is double taxation as profits are taxed first as income to the corporation, then as income to the shareholder when distributed as dividends. In some cases small corporations having not more than 75 shareholders can obtain S-Corporation status. If a corporation has S-Corporation status, it is treated as a Partnership or a Limited Liability Company for tax purposes. S-corporations are not separately taxable entities, so the income is "passed-through" to the shareholders.
In cases where intended activity of the Corporation is connected with education, charity, or scientific activity there is an opportunity to establish a Non-Profit Corporation. Net profit of such corporation is not subject to taxes if it is destined for corporate purposes and is not allocated between the shareholders, directors or other officers.

Limited Liability Company
This type of business organization combines the corporate advantages of limited liability with the partnership advantage of pass-through taxation. In other words, the members of an LLC can be managers of the company not exposing to risks their personal assets.
Limited Liability Companies are taxed on the level of its members like Partnerships.

The main difference between an LLC and an S-Corporation is that all profits, liabilities, losses and deductions of S-corporation are divided between the owners in proportion to the number of shares held by them. An LLC is more flexible as to the division of these items between the owners.

Partnership
The most simple type of partnership is a Sole Partnership. A Sole Partnership is a business entity connected with the sole owner. In this case the owner runs the business on his own behalf. A General Partnership is a form of business organized by two or more individuals who do not want to set up a Corporation or other type of company. In this case the members are responsible for any debts and liabilities in proportion to their stake in share capital of the Partnership. In the same way they participate in the distribution of profits.
In the case of a General Partnership, only the income of the members is subject to taxes.

In a Limited Partnership the assets and liabilities are divided between general and limited partners. Thus, limited partners in contrast to general members are liable for the debts and liabilities of the Partnership only to the amount of their stakes in the partnership's capital.

In a Limited Liability Partnership the assets of each partner are more secured. This is due to the fact that the members of a Limited Liability Partnership do not bear responsibility for any debts or liabilities that have been caused by improper or invalid acts of the other members, officers or agents of the Partnership. In all other cases the members of the Partnership are liable for all debts and liabilities of the Partnership as well as for all debts and liabilities that have been caused by acts committed by any officer subordinated directly or managed by the partners.