Business Legal Structure: A Quick Rundown
Brad Smith • Oct 25, 2019
If you’re starting a business, it’s important to know what type of entity you want your business to be. That’s because the structure of your new business has ramifications on your taxes, legal protections, and benefits.
In this post, we’ll look at the most common types of businesses so you can determine which business legal structure is right for you.
Sole Proprietorship
As a sole proprietor, you have complete control of your business.
Sole proprietorships are easy and inexpensive to form, generally requiring only registration within your county. Proprietors take in all the profits.
Some of the disadvantages of sole proprietorships are that the business owners assume all liability, meaning personal assets are at risk.
General Partnership
Like sole proprietorship, a partnership is the simplest way to start a business with two or more people. Partnerships are also inexpensive to organize, and each partner’s complementary skills may contribute to the business.
Partners share profits in a partnership, and partners have less control since decisions must be agreed upon by each partner. Partners also share liability for each of the other partners.
Both Illinois and Missouri have two other kinds of partnerships - limited partnerships and limited liability partnerships.
Limited partnerships means one partner has unlimited liability, while each of the other partners have limited liability.
Limited liability partnerships differ from limited partnerships in that they give limited liability to every partner.
Limited Liability Company
An LLC is not a corporation, but it provides benefits of both a corporation and a partnership. Owners assume limited liability, protecting your personal assets. This type of business structure is suitable to nearly any type of business with the exception of banking and insurance.
Each state regulates LLCs differently—here’s how they are regulated in Illinois and Missouri.
C Corporation
A C corporation is the most complex form of organization because it is a distinct legal entity separate from its owners. Corporations require many more administrative duties, reporting, and record-keeping than other structures. Stock may be sold to raise capital.
Unlike the other structures, corporations must pay taxes on their profits and may even need to pay taxes when dividends are paid to shareholders.
S Corporation
S corps differ from C corps in that S corps can avoid double taxation that plagues corporations. In addition to registering the S corp with the state, S corps must also file and be approved by the IRS. S corps face criteria not required by C corporations.
Further Reading
To find out more about the different types of business entities, please consult the following sites:
- Choosing A Business Structure (Southern Illinois University Small Business Development Center)
- Choose a Business Structure (Small Business Administration)
- Business Structures (Internal Revenue Service)
If you are looking for help with starting your own business, please contact us today.
Interested in Working With Us?
If you need help with estate planning or any other legal concerns, we are here for you. Don't hesitate to contact our firm directly for assistance. Our dedicated team is ready to provide support and guidance to you and your loved ones during important life transitions.
Whether you're ready to schedule a strategy session to discuss your specific needs or if you're interested in exploring our wide range of complimentary guides and additional resources, we encourage you to get in touch with us.
With licensed attorneys and offices located in both Illinois and Missouri, we are well-equipped to serve clients in these regions. Reach out to us today and let us leverage our expertise and care to guide you through the legal process.
Helpful Guides
Begin your journey by taking advantage of our collection of complimentary guides.
Online Documents
Simple & Convenient, Cost Effective, Attorney Reviewed Documents.
Recent Posts
As we journey through life, one inevitable truth is the process of aging. In the United States, this reality brings about a myriad of legal considerations and challenges, prompting individuals and families to seek guidance in the realm of elder law. From estate planning to long-term care, understanding the intricacies of elder law can greatly ease the burden of navigating the complexities of aging. In this blog, we explore some frequently asked questions about elder law and delve into the landscape of aging in America.
As we journey through life, one inevitable truth is the process of aging. In the United States, this reality brings about a myriad of legal considerations and challenges, prompting individuals and families to seek guidance in the realm of elder law. From estate planning to long-term care, understanding the intricacies of elder law can greatly ease the burden of navigating the complexities of aging. In this blog, we explore some frequently asked questions about elder law and delve into the landscape of aging in America.
Many people overlook the importance of ongoing estate planning, assuming a will or trust is adequate. However, this passive approach can bring costly consequences for both finances and family in the future.
Are you feeling overwhelmed by the complexities of Medicaid in Illinois and Missouri? You're not alone. Many people find themselves in a maze of regulations, paperwork, and confusing terminology when trying to access this vital healthcare program. In this blog post, we'll break down some of the key aspects of Medicaid and discuss why seeking help is essential for ensuring you get the benefits you deserve.
When it comes to estate planning, delaying action can have far-reaching consequences that extend well beyond our lifetimes.
If you don't have a plan in place for your assets, the state will step in to decide how they are distributed. While some may trust the state's judgment, it's important to recognize that it doesn't understand your individual circumstances, and the process can be both time-consuming and expensive.
Click HERE To View April Newsletter
Submit Your Confidential Request
Click the button & fill out the form so we can better understand how we can help.