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The entity
that your new business will operate under is a very important decision to determine
upon. Main considerations are the level of accounting maintenance
required, tax and liability issues, and ownership concerns. The following
is a brief overview of the different business structures and their
advantages and disadvantages. Because each business is unique,
please consult a legal representative or accountant before making a decision.
An United Employer Resources,
Inc. representative will be able to assist you.
The Types of Business Structures
Sole Proprietorship
A sole proprietorship is owned by an individual. He or she has total
control of the business, receives all profits, and is responsible for
taxes and liabilities stemming from the business. If a sole
proprietorship is operating under a name other than the individual's name,
a Fictitious Business Name Statement must be filed with the County Clerk.
 | Easy to Start-Up |
| Less Record Keeping Requirements |
| Ownership is Hard to Transfer |
| Owner is Subject to Personal Liability |
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Corporation
A corporation is a legal entity of its own. Articles of Incorporation
for the formation of the new business must be filed with the Secretary of
State. A primary advantage is that shareholders have limited liability
and are generally not liable for the debts and obligations of the
corporation.
| Limited Personal Liability |
| Can have Multiple Investors |
| Transfer of Ownership can be done easily |
| Corporation Life does not Depend Upon its Owners |
| More Record Keeping Requirements |
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Limited
Liability Company
A Limited Liability Company, LLC, offers similar personal liability
protection like a corporation but is taxed differently. A formation
filing is required with the Secretary of State in addition to a operating
agreement among the members in relation to the affairs of the LLC must be
created.
| Similar Personal Liability Protection as a Corporation |
| More Complicated in Structure than Sole Proprietorship |
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Limited Partnership
A limited partnership business entity may provide limited liability for
some partners. At least one General Partner acts as the controlling
partner and the liability are normally in proportion to the amount
of control or participation by the individual.
| Can have Multiple Investors |
| Some Liability Protection |
| General Partners are Liable for the Business's Debts
and Obligation |
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General
Partnership
A general partnership entity must have at least two or more persons engaged
in a business for profit. There is no personal liability protection
and all partners are jointly liable for all obligation of the business.
| Can have More than One Owner |
| Taxed like Sole Proprietorship for Partners |
| No Personal Liability Protection |
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Limited Liability Partnership
A limited liability partnership is only available to a partnership for the
practice of Accountancy, Law, Architecture, or similar service.
| Some Personal Liability Protection |
| For Specific Type of Businesses Only |
| Must Maintain Certain Levels of Insurance |
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Ask for Help!!!
Choosing the right business entity is very critical and may affect the
personal liability of the owner(s). While information from
this website and other online resources may help you understand the
different entities, a professional consultant can help ensure
your business get started on the right track. |
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This site is designed to provide accurate and
authoritative information in regard to the subject matter covered.
It is furnished with the understanding that ueronline.com is not engaged
in rendering legal, accounting, or other professional service. If
legal advice or other expert assistance is required, the services of a
competent professional person should be sought.
Thank You for Visiting United Employer
Resources, Inc.
Copyright © 2000, 2001, 2002, 2003
United Employer Resources, Inc. All rights reserved.
Revised:
September 23, 2003.
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