Various Types of Business Entities are available and we will navigate you to the best type for you.
Individual Person or Persons without Liability Protection. Taxation directly “flows” to the person and entity is created with expectations of financial gain or profit. Liability is joint and several to all partners unless “limited” status. Each partner shares equally in the profit and loss unless a contrary agreement in writing. Partnership agreement should be in writing and filed with the Secretary of State. Partnerships are more formal than a Sole Proprietorship.
Limited Liability Company (LLC):
One or more persons or companies or corporations formed together for a common business goal. Liability is limited to company assets unless LLC is not properly formed, managed or reported. Each member is liability is limited to the amount of money contributed to the LLC in form of capital contributions – contributions in return for stock shares in the LLC. Taxation “flow” directly to the members, usually, with a greater opportunity for deductions. LLC can be “Member-Managed” where all members, those with capital contributions, share in the management and operation of the LLC or “Manager Managed” where a person, not necessarily a member, directs the management and operation of the LLC. LLC’s can distribute the profits and losses in any manner, not necessarily on percentage of shares. LLC needs to be registered with the Secretary of
State and file annual reports. More formal than Partnership, less formal than Corporation. Can restrict the selling of shares outside of the Members.
One or more persons or LLC’s or companies or corporations formed together for a common goal. Liability is limited to the amount of money to the corporation in form of capital contributions – contributions in return for stock shares in the corporation. Taxation at the Corporate Level as well as on disbursement. Employees are taxed as employees, Shareholders receive distributions or dividends which are individually taxed. Corporations have a greater opportunities for deductions, including health care insurance payments. Corporations have a Board of Directors, which directs the course for the corporation, an Executive Officer Level (CEO, President, VP etc) which control the daily operations , and the Shareholders, who have no say the daily operations but vote on the Directors. Purpose of Corporation is to make money for the Shareholders and Shareholders can remove Directors and sue the coporation if it is not making enough money. “Close” corporations can blur the lines between the three. Corporations distribute the profits based on percentage of shares. Corporation needs to be registered with the Secretary of State and file annual reports. More formal than Partnership, more formal than a LLC. Can not restrict the sales of shares to others, generally.
Flexible Purpose & Benefit Corporations:
One or more persons or LLC’s or companies or corporations formed together for a common goal BUT this goal is not necessarily to only make money ; It is a combination of profitability and social consciousness. Benefit Corporations are formed for the entrepreneurs that are truly committed to the environment, or are seeking investors that are truly committed to the environment and sustainable purposes. Benefit Corporations are required to pursue a General Public Benefit – a “material positive impact on society and the environment, taken as a whole”. Flexible Purpose Corporations, on the other hand, need only pursue a specific purpose that has a positive effect on any of the following: its employees, suppliers, customers, creditors; the community and society; or the environment. Benefit Corporations are held accountable for their stated sustainable purposes, with extensive reporting requirements and shareholder oversight. Flexible Purpose Corporations, on the other hand, may waive the shareholder reporting requirements under certain circumstances, and where reporting is required, the annual report is far less onerous on company resources. This gives the entrepreneur the recognition of being a “socially conscience” company, as well as the benefit of being a “for-profit” enterprise.
A legal structure authorized by state law allowing people to come together to either benefit members of an organization (a club, or mutual benefit society) or for some public purpose (such as a hospital, environmental organization or literary society). Nonprofit corporations, despite the name, can make a profit, but the business cannot be designed primarily for profit-making purposes, and the profits must be used for the benefit of the organization or purpose the corporation was created to help. When a nonprofit corporation dissolves, any remaining assets must be distributed to another nonprofit, not to board members. As with for-profit corporations, directors of nonprofit corporations are normally shielded from personal liability for the organization’s debts. Some nonprofit corporations qualify for a federal tax exemption under § 501(c)(3) of the Internal Revenue Code, with the result that contributions to the nonprofit are tax deductible by their donors.