There are a number of different types of legal structures to do business in the US, including: sole proprietorship, partnership, limitedliabilitycompany (LLC) and corporation.
Usually the most used is C-Corporation and Limited Liability Company (LLC).
Limited Liability Company
The basic structure of the LLC is set out in the Articles of Organization. “The OperatingAgreement”, a contract signed by LLC Members, details the services provided by the LLC and the rights and obligations of its owners.
- Limited Liability – Homeowners and managers are generally not personally liable for LLC’s liabilities.
- A tax level – other than Corporations, LLC’s profits and losses are passed on without fee to its Members.
- ]Advantages of personal tax for Members and Managers – In the event that LLC incur losses and it has basic assets, paid-up capital or retained earnings; your Members may deduct these losses from your personal income taxes.
- Financing Options – The LLC may sell its shares, in large or small percentages, to future investors. In addition, banks and other financial institutions are more likely to extend loans to LLC with certain history, by the time of existence and formality of organization of these entities.
The form of organization of a Corporation is based on the separation of ownership and management. It is true that a single individual can enter a business and act as sole shareholder, director and officer.
The basic organizational structure of the Corporation and its capitalization of shares are set forth in the Certificate of Incorporation, or Permit, a document that is filed with the authorities
- Lack of personal responsibility – the owners and managers of a corporation generally will not be personally liable for the corporation’s debts.
- Financing options – the corporation may sell its own shares, in smaller or larger shares, to future investors. In addition, banks and other financial institutions are more likely to extend loans to corporations with a certain history, by the time of existence and organizational formality of these entities.
- There is no Publication Request for Corporations.
As a third option, if more than one owner is involved, the business can operate as a partnership. If the Company uses a fictitious name, a “Business Certificate for Members” must be filed at the CountyClerk branch, in the county where the business is located.
- Limited Beginning Formalities – Under New York law, a partnership may be created simply by agreement between the partners, without filing or notice to government agencies of any kind, unless it will use a fancy name (see previous page).
- Immediate operation – there is no need for a waiting period before the company can begin its operations.
- Fees are not necessary to start operation – but see comment of note above, about the convenience of society agreement.
- A tax level – in the Company, profits or losses are passed on to shareholders without tax at the company level. However it is necessary to fill in the form of income tax.
- Mobility – as in the individual firm, the Company can operate anywhere in the United States.