Thatcher Law Firm Can Help You Line Everything Up

Choosing the Right Type of Entity for Your New Business

1. Sole Proprietor

 

a. Business is not a separate entity from owner

 

b. Only one owner of business

 

c. No filing with Secretary of State

 

d. No separate tax filings or ID number

 

e. Business income and individual owner's income combined on personal tax return

 

f. No limited liability

 

2. Partnership

 

a. Two or more owners

 

b. Partnership Agreement

 

c. No filing with Secretary of State

 

d. No separate tax filings or ID numbers

 

e. Business income flows to owner's personal tax returns

 

f. Limited liability

 

3. Limited Partnership (LLP)

 

a. File Certificate of Limited Partnership with Secretary of State

 

b. Partnership Agreement

 

c. Need federal and state ID numbers

 

d. Separate tax returns but tax at partner level only

 

e. Distributions need not be pro rata

 

f. Distributions are subject to FICA

 

g. Limited partners have limited liability but general partners do not unless LLLP

 

4. C Corporation

 

a. File Articles of Incorporation with Secretary of State

 

b. Need By-laws, Corporate Minutes and Shareholders' Agreement

 

c. No limit on number of owners or classes of ownership (stock)

 

d. Dividends must be pro rata on stock ownership per class

 

e. Need federal and state ID numbers and separate tax returns

 

f. Tax at corporate and shareholder levels

 

g. Limited liability

 

5. S Corporation

 

a. File Articles of Incorporation with Secretary of State

 

b. Need By-laws, Corporate Minutes and Shareholders' Agreement

 

c. Limits on number and types of shareholders, one class on stock only

 

d. Need federal and state Tax ID numbers and S election filed with IRS

 

e. Separate tax returns but tax at shareholder level only

 

f. Distributions must be pro rata based on stock ownership

 

g. Distributions not subject to FICA

 

h. Limited liability

 

6. Limited Liability Company (LLC)

 

a. File Articles of Organization with Secretary of State

 

b. Need By-laws/Operating Agreement, Minutes, Member Control Agreement

 

c. No limit on number of owners or classes of ownership

 

d. Need federal and state tax ID numbers

 

e. Separate tax returns but tax at member level only

 

f. Distributions need not be pro rata based on ownership

 

g. Distributions are subject to FICA

 

h. Limited liability

 

Additional Articles

Children Added on Title to Real Estate: Children On Real Estate Title

Debt Collection On Deceased Family Members: Debt Collection On Deceased Family Members

Estate Planning- Preparation: Estate Planning Being Prepared

Estate Planning- Guardianships & Conservatorships: Guardianships & Conservatorships

Estate Planning- Wills, Trusts, & Beneficiary Designation: Types of Estate Planning Documents

Estate Planning- Probate: Types of Probate Procedures

Memorandum on Mechanic's Liens: Mechanics Liens

Transfer On Death Deed (TOOD): Transfer On Death Deeds

 

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