Choosing your business structure:



Most small businesses are set up in the name(s) of the owner(s) or as a corporation.   These are the simplest and usually cheapest forms of business to file.   Other forms of business such as Limited Liability Company have many advantages over the simpler business corporation, but can cost thousands of dollars more.   The information provided here will help you decide who you want to set up your business, but you should speak with your accountant and lawyer before making the final decision. Top of Page

Business Corporation:

Because of the liability protection and small cost of forming a Business Corporation, this is usually the most preferred structure to use.
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Sole proprietorship:

Many businesses start out as a "sole proprietorship" because of the low cost and ease of starting the business.   A sole proprietorship is a person who wants to do business either under his/her own name or under an assumed name but does not want to form a Corporation.   If more than one person is opening the business then it would be required to be a partnership or a corporation.
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Partnership:

A Partnership is where more than one person who wants to do business either under their own name or under an assumed name but does not want to form a Corporation.   For a Partnership you much filed an Assumed Name Certificate. Top of Page

Limited Liability Company (LLC):

Limited Liability Companys have become very popular because of they provide the greatest flexibility with ownership and taxation.   An LLC is much more expensive to form than a regular Corporation which makes them less popular for smaller businesses starting out. Top of Page

Limited Partnership (LP):

Limited Partnerships are typically used for investor heavy businesses where the investors ("limited partners") do not want any say in the business or any personal liability for debts or judgements.   There must be at least one "General Partner" who is personally responsible for debts and judgments and who runs the business.   A LP is much more expensive to form than a regular Corporation or Partnership which makes them less popular for smaller businesses starting out. Top of Page

Professional Service Corporation (PC):

The Profession Service Corporation is the same as a Business Corporation except that ALL of the shareholders must be licensed professionals usually in the same profession (doctors, lawyers, real estate brokers, therapists, etc.).   Also there is no limited liability for any shareholder for his/her own negligence or malpractice.

You can chose to to have the corporation treated as an individual for tax purposes by filing the Subchapter S election.   Without the Subchapter S election the corporation is taxed at 34% of taxable income. Top of Page

Limited Liability Partnership (LLP):

The Limited Liability Partnership is similiar to a Limited Partnership except that ALL of the partners must be licensed professionals usually in the same profession (doctors, lawyers, real estate brokers, therapists, etc.).   Also there is no limited liability for any partner for his/her own negligence or malpractice.

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Not for Profit Corporation:

The Not for Profit Corporation is similiar to the Business Corporation except that it must be formed for specific purpose authorized by the Not-for-Profit Corporation Law Section 201 and cannot be operated or dissolved in such as way as to benefit the Corporations officers, directors, or members.   The State provides a fillable Certificate of Incorporation.

There are strict bookeeping, accounting and tax filing requirements for Not for Profit Corps and failure to comply with these can result in significant civil and even criminal liability.

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Can I do business under a different name?

Any business can operate under a different name by filing a Certificate of Assumed Name as follows.