Types of Business Structures
A sole proprietorship is a business that is owned and operated by an individual. The owner is personally and legally responsible for his or her actions. All profit or loss from a sole proprietorship belongs to the owner.
A general partnership is formed by two or more people who agree to contribute money, labor and/or skill to a business and to share its profits, losses, and management. All partners typically are held legally responsible for their own actions and the actions of the other partners.
To file your sole proprietorship or general partnership business name:
- Download the Certificate of Assumed Name.
- File your Assumed Name form with the County Register of Deeds.
- Note: There is no statewide name registration for sole proprietorships or general partnerships, so you must file your business name in the county where you conduct business.
A corporation is a separate legal entity from the individuals who form it and its owners. Owners are generally protected from personal liability.
To establish a corporation, download the Articles of Incorporation.
Limited Liability Company (LLC)
A limited liability company (LLC) is legally distinct and separate from its owners. An LLC offers its owners both limited personal liability for actions of the business and special tax treatment that may prevent what has been called “double taxation” of the owners’ income.
To form an LLC, download the Articles of Organization.
According to the IRS, S corporations are corporations that elect to pass corporate income, losses, deductions, and credits through to their shareholders for federal tax purposes. Shareholders of S corporations report the flow-through of income and losses on their personal tax returns and are assessed tax at their individual income tax rates. This allows S corporations to avoid double taxation on the corporate income. S corporations are responsible for tax on certain built-in gains and passive income at the entity level.
A business must first exist as an LLC or a C-Corp to be considered for S-Corp status. To register as an S-Corporation, complete IRS Form 2553.