Types of Business Entities

Types of Business Entities

Below are the types of entities to choose from and a short description of how they function:

Sole Proprietorship

A sole proprietorship is a business owned and controlled exclusively by one person. This person is responsible for the business, including all liability and any profit or loss.

Partnership/General Partnership

A partnership or general partnership is an association of two or more persons to carry on as co-owners of a business for profit. These individuals are responsible for the business, including all liability and any profit or loss.

Limited Liability Partnership

A limited liability partnership is a general partnership that has selected to have limited personal liability for its general partners by registering this election with the Secretary of State.

Limited Liability Company

A limited liability company is a cross between a corporation (with an ability to limit personal liability) and a partnership (with an ability to assess profits and losses to individuals). This type of organization provides a flexible structure to achieve these ends.

C-Corps & S-Corps

A corporation is a legal entity established by an individual(s) under the laws of the state to conduct particular types of business or transactions. The corporation exists separately from its shareholders, directors, and employees. A corporation is a ‘person’ in the eyes of the law. A corporation functions in the same manner as a person and has the same rights and responsibilities as a person. The corporation may make contracts, assume liabilities, sue, and be sued. The corporation and its shareholders and directors have specific duties and obligations to each other.

Joint Venture

A joint venture is a business arrangement in which two or more parties agree to pool their resources for the purpose of accomplishing a specific task.

Not-for-Profit Entity

A not-for-profit entity is formed for the purpose of advancing a particular objective of an organization that is not established to make a profit. Generally, this includes charitable, benevolent, and educational organizations. These entities are also called not-for-profit corporations.