CORPORATE /BUSINESS LAW
The proprietorship is considered an informal business arrangement with minimal formalities such as a business license and ficticious business name registration required. You have a proprietorship just by simply "going into business", with no formality other than a name.
The other entities listed above require formalization as governed by statutes from the state legislature which require official registration with the state. These entities are accompanied with formal rules from the state regarding the entity's structure and operation, along with some state supervision and annual taxes or registration fees.
What is a Business Entity?
In the United States, there are essentially four types of business entities.
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Corporations (C, S and PSC)
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Limited Liability Company (LLC)
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Partnerships (general and limited)
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Proprietorship
Who Needs a New Business Entity?
Sole proprietors and the self employed don't have multiple owner issues, but they do lack limited liability and special business tax treatment. Lack of limited liability is often a major threat to the business owner and often times the single most important reason for establishing the entity. Your status as proprietor, self employed or general partner provides no limited liability at all. You may be at risk from business related lawsuits.
Which Is Best for Me?
This question can only be answered by the specifics of your situation and is best answered by working with a competent attorney. The tax treatments vary substantially based on the type of entity and must be considered in the formation stage.
Other Services
Whether it is an incorporation, review or drafting of contracts, buy-sell agreements, advice on how to handle a difficult business situation or simply having an attorney on call for your business corporate counsel needs, we are here to help.
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