Common Business Structures in America
You need to be clear about your business structure before you register your business because your business structure will affect your personal liability, how much you pay in taxes, and future development of your business.
1. Sole Proprietorship
Sole proprietorship means that you take full control of your non-stock corporation, which is easiest to form.
2. Partnerships
Partnerships are formed by two or more people, are relatively easier to form, and forming cost are lower.
3. Limited Liability Company (LLC)
Because most states have no restrictions on the ownership of limited liability companies, its members can be individuals, corporations, other LLCs or foreign units, and the establishing standard is also looser. In most cases, limited liability companies give you the protection from exempt from personal liability. If your LLC faces bankruptcies or lawsuits, your personal assets will not be at risk, which also makes forming an LLC more popular.
4. Corporation
Corporations are clearly and independently legal entities and have higher forming cost. If a shareholder leaves the company or sells his or her shares, the C corp can continue doing business relatively undisturbed.
The following table for comparing common business structures:
