Legal Business Structures

Choose the Right Legal Structure for your Company

Business structures can vary as widely as the types of businesses that use them. When setting up a business, choosing the right structure can be critical to the success and life of the company.

Sole Proprietor: this is the most traditional form of business, where one simply goes into business in their own name or under a "doing business as" (DBA) trade name. It offers the least protection to the owner of the business but is the simplest to set up.

Partnership: this is another very common form of business ownership. It is created when two or more people or entities come together to do business, and can be the equivalent of a sole proprietorship in terms of its ease of set up and lack of legal protection. However, some jurisdictions have started to create variations on this form of ownership, such as the limited partnership, in an effort to provide some protection to business owners and/or to better define the relationships of the partners.

Corporations: this is a form of business ownership that creates a separate legal entity which is jointly owned by multiple investors. There are two primary forms of corporations: S and C. Each has its own unique advantages and disadvantages as related to raising capital and paying taxes.

Limited Liability Companies: these are a relatively new addition to the forms of business ownership. In simplest terms, it tends to combine some of the best features of partnerships and S Corps, such as ease of organization and pass through taxation.

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