If you have a work-at-home business, you may be wondering what kind of business you should start. When setting up a business, you need to decide early on how you are going to structure your business. There will be legal pros and cons to all, but it’s up to you to decide which type of business best suits your interests: sole proprietorship, partnership, corporation, non-profit corporation, or a limited liability company (LLC). It is recommended that you search
the advice of a professional before committing to any of the following basic options. The decision you make may have both legal and practical implications.
– Single owner
This is the simplest way and is usually chosen by one person. This person is the owner and worker, although sole proprietorships may have employees. Sole proprietors are direct owners of the business and are directly responsible for its debts. This type of business is suitable for a business where personal liability is not a big concern.
– camaraderie
There are three different types of associations; general partnerships, limited partnerships and limited liability partnerships.
A general partnership is a form of business entity in which two or more co-owners engage in for-profit business. There is no limit to the number or type of partners to form a general partnership. Individual partners are responsible for the debts and obligations of the partnership.
A limited partnership is very different from a general partnership and is typically established by companies that invest money in other businesses or real estate. They also have passive partners called limited partners.
A limited liability partnership (LLP) is a general partnership that elects to be treated as an LLP by filing with the Secretary of State. An LLP structure protects partners from liability, can operate in a more informal and flexible manner than a corporation, and has all the tax advantages of partnership. LLP partners are legally provided with full protection against partnership liabilities, debts and obligations. It allows members of the LLP to play an active role in the business of the partnership, without exposing them to personal liability for the acts of others, except to the extent of their investment in the LLP.
– Corporation
A corporation is a legal entity created through the laws of its state of incorporation, treating a corporation as a legal “person” that has standing to sue and be sued, distinct from its shareholders. A corporation will continue to exist even if the members or owners die or resign.
– Non-profit corporation
A nonprofit corporation is a corporation formed to carry out a charitable, educational, religious, literary, or scientific purpose. Its funds come from public and private grants and donations from individuals and companies. The federal and state governments generally do not tax nonprofit corporations on money they earn that is related to their nonprofit purpose, because of the benefits they bring to society.
– Limited Liability Companies
A limited liability company is a combination of a partnership and a corporation. Like an LLP, a limited liability company (LLC) has a separate legal entity from its members.
Unlike a corporation, an LLC does not exist indefinitely, however many states now allow an LLC to exist in perpetuity. This perpetual existence must be stipulated in the articles of organization or in a written operating agreement, otherwise an LLC is dissolved by death, withdrawal, resignation, expulsion, or bankruptcy of a member (unless within 90 days a majority both in the profits and in the capital vote of interest to continue with the LLC).
The shareholders (members or owners) of an LLC have limited liability for the company’s debts.
It is very important that you decide which of these five options is right for you, as each has vast differences. Please consult an expert before making your final decision.
A great place to start your research and save money on forms, legal fees, etc. is
US Legal Forms Their website has sites on legal forms, law summaries, legal definitions, attorneys, forms subscriptions, public library form subscriptions, and search law.