What are the different forms of corporations, LLC, inc's, etc.?

Question

My friend and I are producing our own line of clothing and just started. We wanted to know what the differences are and once you select one can you switch? Also, whom do you contact to form your company? Thanks.

Answer 1

If you go to your state's website there should be links on startimg a business.


Sole Proprietorship
A sole proprietorship is the form of business entity with the least amount of legal formalities. In a proprietorship, the owner assumes sole responsibility for the operations and finances of the business, including profit and loss. In the proprietorship form of business entity, the owner’s personal property is tied directly to the business; therefore, the owner assumes unlimited risk of his personal assets.


“C” Corporation
Corporations are a separate entity from its owners. Corporations provide the shareholders with the most protection from liability and responsibility from debts and contracts. Profits for a corporation are taxed at the corporate level when the income is earned and is also taxed at the individual shareholder level.


"S" Corporation
An "S" Corporation is similar to a corporation in that it provides its shareholders with protection from liability. However, unlike a corporation, an "S" corporation is exempt from federal income tax. Instead the taxes are paid solely by the individual shareholders.


General Partnership
General Partnerships require an agreement between two or more individuals or entities to jointly own and operate a business. Profit, loss and managerial duties are shared among the partners, and each partner is personally liable for partnership debts. Partnerships do not pay federal tax, (for state tax purposes, partnerships are required to pay business taxes to New Hampshire), but must file an informational return, while individual partners report their share of profits and losses on their personal return. Short term partnerships are also known as joint ventures.


Limited Partnership
A limited partnership is a form of business organization that offers some of the partner's limited liability. It consists of a general partner who organizes and manages the partnership and its operations, and limited partners who contribute capital but have limited liability and assume no active role in day-to-day business affairs.


Limited Liability Partnership
LLP's are organized to protect individual partners from personal liability for the negligent acts of other partners or employees not under their direct control. LLP's are not recognized by every state and those that do, sometimes limit LLP's to organizations that provide a professional service, such as medicine or law, for which each partner is licensed. Partners report their share of profits and losses on their personal tax returns. Check with your Secretary of State's office to see if your state recognizes LLP's and if so, which occupations qualify.


Limited Liability Company
A Limited Liability Company (LLC) is a combination of the corporate and partnership forms of business. In an LLC, parties control shares of the company and like corporations, and their liability for the operations of the company is determined by their level of investment. However, like partnerships, income tax is not paid at the LLC level, but rather it is "passed through" and taxed at the shareholder level. This somewhat complicated form of business entity should be discussed further with an attorney or accountant to determine if it will fit your needs.

Answer 2

It is just semantics, they all means the same thing. All corporations are limited in liability. They are liable for only for the assets the corp. has.