Sole proprietor is the easiest business to start. This requires nothing but that you begin providing a product or service and you must file an assumed name certificate in the county where you will be working. While this is the easiest form it has no liability protection at all.
Partnership is a business structure that includes two or more people. If no formation papers are filed with the secretary of state what is created is a general partnership. A general partnership is the default business structure of two or more people providing a product or service. You must file an assumed name certificate with the county were you will be working. There is no form of liability protection for the members of a general partnership.
If you file formation papers with the secretary of state you can create a a limited partnership or a limited liability partnership. A limited partnership must included the name limited or limited partnership or the abbreviation of either in its name. There is some liability protection in this form of partnership.
A limited liability partnership must include in the name either limited liability partnership or the abbreviation LLP. In addition to filing formation papers with the secretary of state, the partners have annual filing requirements. An LLP has additional insurance requirements to satisfy as well. There is liability protection in this form of partnership.
Corporations must file formation papers with the secretary of state. The company name must include corporation, incorporated, company, limited or an abbreviation of any of these. There is no limitation on the number of people or entities that can own a C corp. However, there are limits on S corp ownership. There are additional differences between C and S corp status that will be discussed in a future blog entry. There is liability protection in this business form.
Limited Liability Companies must file formation papers with the secretary of state. The company name must include limited liability company or limited company or an abbreviation of either. This business form combines many of the benefits of corporations and partnerships and blend them into a new entity. There is liability protection in this business form.
There are tax implications to each of these business types that is outside the scope of this blog entry. This will be addressed in future entries that provide in depth coverage of each business entity.
Law Offices of Debbie J. Cunningham
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