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Business Organizations
In order to pick the business structure that meets your needs, you have to understand the advantages and protections of each business structure. The type of organization structure will determine how the business handles tax matters and whether there is protection against personal liability. An experienced business attorney can assist you in correctly forming your business formation, drafting personnel policies and corporate records, and ensuring that your company complies with State and Federal laws.

For profit businesses typically fall into one of three main forms—unincorporated, incorporated, and a limited liability corporation (LLC). An unincorporated business has the option of forming as either a sole proprietorship or a partnership. Incorporated businesses generally form as either a C-Corporation or an S-Corporation. An LLC is a hybrid of the incorporated and unincorporated business structures, combining many benefits of both.

Sole Proprietorships
In order to pick the business structure that meets your needs, you have to understand the advantages and protections of each business structure. The type of organization structure will determine how the business handles tax matters and whether there is protection against personal liability. An experienced business attorney can assist you in correctly forming your business formation, drafting personnel policies and corporate records, and ensuring that your company complies with State and Federal laws.

A sole proprietorship is an unincorporated business owned by one person. Due to its easy of form and operation, it is quite popular. It does not require the filing of any paperwork with the government. However, since the sole proprietor is legally inseparable from the business, the owner is personally liable for all actions and liabilities of the business.
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Partnerships
A partnership often involves a group of two or more sole proprietors. Forming a partnership does not involve filing any paperwork with the government in its formation. However, it is usually advisable to create a written agreement between the partners (a “Partnership Agreement”). Believe it or not, the relationship among partners can be subject to problems. So, it is best to plan for these contingencies upon formation to alleviate any guesswork later. Additionally, a Partnership Agreement allows each partner to protect him or herself by defining the terms of the partnership in writing. Many times this type of agreement will describe the distribution of responsibilities and profits, as well as a contingency plan in the event a partner dies or decides to leave.
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The Corporation
A corporation is a legal entity that separates ownership from the business owners (also known as the stockholders or shareholders). Each state has its own law regarding the formation of corporations, but many follow the Model Business Corporation Act. Each state also has law that foreign corporations must follow in order to do business in that state.
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Limited Liability Companies (LLC)
A limited liability company (LLC) is a business entity that combines the liability protection of a corporation with many of the flexibilities of the partnership. It is a separate legal entity like a corporation, but it is treated as a partnership for tax purposes. The owners (referred to as "members") are held personally responsible for the LLC's taxes, avoiding the double taxation of the C-Corporation.
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Contact us at 877-479-7970, or e-mail us at info@law-thomas.com, to arrange for a confidential complimentary family law consultation.
FAQ's
Q: What is the difference between a C Corporation and an S Corporation?
A: All corporations begin their lives as a C corporation. The owners can elect to become an S corporation by filing a form 2553. This new status allows the owners to be taxed like a partnership or a sole proprietorship. The income of the corporation "passes through" to the owners without the corporation being taxed. The S corporation does come with additional limitations, though, namely a shareholder limit of 100 and U.S. residency requirement for shareholders.

Q: What is "piercing the corporate veil"?
A: In some cases, courts have allowed plaintiffs to pursue the owners' assets of the corporation to satisfy a judgment against the corporation. This defeats the liability protection that owners typically have with the corporation. It is only in the most severe cases that courts allow plaintiffs to pierce the corporate veil. Some instances may include: fraud, intermingling of owner and corporate funds, improper formation, and practices to the point where the corporation can no longer be viewed as a separate entity. This is also known as "alter ego liability."

Q: What is a "registered agent"?
A: A registered agent provides a local address for the receipt of service of papers and for contact by the Secretary of State and other agencies. A corporation and LLC need registered agents because even though they are separate legal entities, they cannot receive paperwork, so they need someone to receive information on their behalf.

Q: Do I need permission to conduct business in another state when I am already incorporated in my own state?
A: Yes. A foreign corporation wishing to do business in another state must qualify to do so. Information on the process may be obtained from the Secretary of State in the state that the company is going into.

Q: Is there a benefit to incorporating in Nevada or Delaware?
A: Generally, no. There used to be significant benefit to incorporating in Delaware or Nevada, but with the changes in state laws those reasons no longer exist.

Q: What is a non-profit corporation?
A: A non-profit corporation is a corporation that is carried out for a charitable, educational, religious, literary or scientific purpose. A non-profit corporation does not pay either state or federal taxes because the government deems the actions of th corporation to be for the betterment of society.

Resources
The Small Business Administration (SBA)
The Tools section of the Small Business Administration's Web site provides users with small business information.

Findlaw Business Structure
This web site provides information on the different legal structures for a business.

Megalaw.com
This site has links to state corporate statutes. It also provides an excellent list of links to corporate law and business organizational websites.

IRS Department of Treasury
This site has links to tax forms and formation for all entities and business types.