- Sole Proprietorship: A sole proprietorship is a business that is owned and operated by a single individual. There is no formal process for forming a sole proprietorship, and it is the simplest and most common form of business organization. It doesn't have the liability protection of the other structures and the owner is fully liable for the business's debts and liabilities.
- LLC (Limited Liability Company): An LLC is a hybrid business structure that combines the personal liability protection of a corporation with the tax benefits of a partnership. To form an LLC, entrepreneurs must file articles of organization with the state and pay a filing fee. They must also create an operating agreement, which outlines the company's management structure and the rights and responsibilities of its members. LLCs are easy to set up and offer personal liability protection to their owners, called members.
- C-Corp (C Corporation): A C-Corp is a traditional corporation that is treated as a separate legal entity from its owners, called shareholders. To form a C-Corp, entrepreneurs must file articles of incorporation with the state and pay a filing fee. They must also hold an organizational meeting and adopt bylaws, which govern the corporation's internal operations. C-Corps have to pay corporate income tax on their profits, but the shareholders can also benefit from the double taxation, which taxes the dividends paid to them.
- S-Corp (S Corporation): An S-Corp is similar to a C-Corp, but it is taxed as a pass-through entity, meaning that the business's profits and losses are passed through to the shareholders and reported on their personal income tax returns. To form an S-Corp, entrepreneurs must first form a C-Corp and then file an S-Corp election with the IRS. S-Corps have the same protections as C-Corps but with the advantage of avoiding double taxation.
- Non-Profit: A non-profit organization is formed for charitable, educational, religious, or other similar purposes and is exempt from federal income tax. To form a non-profit, entrepreneurs must file articles of incorporation with the state and apply for tax-exempt status with the IRS. Non-profits are not allowed to distribute profits to shareholders and their activities are restricted to their charitable mission.
- Trade names: A trade name or "doing business as" name gives a business the ability to operate legally under one or more company names. This is beneficial for companies that provide multiple different types of products or services, or wish to market their company under a different name or location.
Starting a small business can be a daunting task, but with the right guidance and support, it can also be a rewarding and fulfilling experience. One of the first steps in starting a small business is to properly form the business entity. This process can be confusing and time-consuming for those who are not familiar with the legal requirements, but with the help of a professional business formation service, the process can be made simple and straightforward.
Business formation services help entrepreneurs navigate the legal requirements for starting a business and can provide a variety of services such as registering the business with the state, drafting and filing articles of incorporation, and creating bylaws and operating agreements. A professional business document creation service can provide many types of custom business documents that are used to create or alter a business entity. These services can also provide assistance with obtaining any necessary licenses and permits and can help small business owners understand and comply with any ongoing legal and regulatory requirements.
When choosing a business formation service, it is important to find a provider that has experience and expertise in the specific type of business you are starting. For example, if you are starting a c-corporation, you will need to follow the business guidelines that are specific for that type of organization. Additionally, it's important to find a service that provides clear and transparent pricing and that will be available to answer any questions or concerns you may have throughout the process.
Another important factor to consider when choosing a business formation service is the level of support they provide after the business is formed. Some services may provide ongoing support with compliance and regulatory requirements, while others may not. It's important to find a service that will be available to answer questions and provide support as the business grows and evolves.
Forming a small business can be a complex process, but with the help of a professional business formation service, it can be made simple and easy. These services can help entrepreneurs navigate the legal requirements and provide ongoing support as the business grows and evolves. Whether you are starting a non-profit organization, a small retail business, or an online startup, a professional business formation service can help ensure that your business is properly formed and in compliance with all necessary regulations.