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Types of Business Entities/Structures

What is a corporation?

  • A corporation is an independent legal entity that exists separately from the people who own, control and manage it.
  • It does not dissolve when its owners (or shareholders) die because it is considered a separate “person.”
  • A corporation can enter into contracts, pay taxes, transact business, etc.
  • The owners have limited liability.
  • Contact an attorney or an accountant to determine if this structure works for you.

What is a limited liability company?

  • A limited liability company (LLC) is similar to a corporation, but with slight differences.
  • Like a corporation, it offers limited personal liability. 
  • An LLC is not required to hold regular stockholder or management meetings, and there are no requirements to comply with other corporate formalities.
  • Contact an attorney or an accountant to determine if this structure works for you.

What is a partnership?

  • A partnership exists when two or more persons co-own a business and share in the profits and losses of the business.
  • Each of the co-owners or partners contribute something, usually money or real property, to the business endeavor.  

What is a general partnership?

  • A partnership where the rights and responsibilities are divided equally among the partners.
  • The partners are referred to as general partners because each partner can act on behalf of all the partners, and each partner is responsible for the partnership’s debts and obligations.
  • Contact an attorney or an accountant to obtain more information.

What is a limited partnership?

  • A partnership composed of both general and limited partners.
  • This type of partnership allows each partner to determine and/or limit his or her personal liability.
  • Unlike general partners, limited partners are not responsible for the partnership’s actions, debts and obligations.
  • General partners have the right to manage the business. Limited partners do not.
  • Both general and limited partners benefit from the business’s profits.
  • Contact an attorney or an accountant to determine if this structure works for you.

What is a sole proprietorship?

  • A sole proprietorship is the simplest and most common structure chosen to start a business.
  • It is an unincorporated business owned and operated by one individual with no distinction between the business and the owner. 
  • Sole proprietorships, when not operating under the owner’s legal name, must register a fictitious name with the Division of Corporations.
  • Contact an attorney or an accountant to determine if this structure works for you.