Small Business Resources
Business Basics -
Choosing Your Business Structure
Every business type has its own advantages and disadvantages. Finding the one that is right for your business depends on your goals, who is involved, and your willingness to take on risk. Below is an overview of four of the most common types of business structures to help you decide which one is right for you.
Sole Proprietorship is a type of business where there is one person who is the owner. You are essentially self-employed and are responsible for paying your own taxes, as well as any debts, losses or liabilities.
A General Partnership is a business that has two or more owners. It is similar to a Sole Proprietorship in that all of the owners control the business and share in the profits. Each partner is responsible for paying their taxes and is personally liable for the debts of the businesses.
In a Limited Liability Company, instead of owners, it has “members”, which can be individuals or even other businesses. A Limited Liability Company is formed by filing Articles of Organization with the state and provides the same liability protections that corporations have for their shareholders. This means that - generally - members are not personally liable for the debts and obligations of the business.
A Corporation is formed by one or more people that file Articles of Incorporation with the state. A Corporation files and pays its own taxes; however, shareholders may also need to pay taxes on the income they receive from the Corporation. As with a Limited Liability Company, a Corporation protects its shareholders from being personally liable for its debts and obligations.
Please note, this information on this website does not constitute legal advice. It is provided for general information purposes only.