Business Entity Types

General Entity Type Information

The following is a general description of the various entity types that you can register with this service. Further detail for each entity can be obtained by clicking on the green question mark located next to each item. This information sheet is not intended to substitute nor replace the advice of legal counsel.

A Sole Proprietorship is one individual in business alone. Sole proprietorships are the most common form of business structure. This type of business is simple to form and operate, and may enjoy greater flexibility of management and fewer legal controls. However, the business owner is personally liable for all debts incurred by the business.

A General Partnership is composed of two or more persons who agree to contribute money, labor, and/or skill to a business. Each partner shares the profits, losses, and management of the business, and each partner is personally and equally liable for debts of the partnership. Formal terms of the partnership are usually contained in a written partnership agreement.

A Limited Partnership is composed of one or more principals and one or more limited partners. The principals manage the business and share fully in its profits and losses. Limited partners share in the profits of the business, but their losses are limited to the extent of their investment. Limited partners are usually not involved in the day-to-day operations of the business.

A Limited Liability Partnership is similar to a General Partnership except that normally a partner does not have personal liability for the negligence of another partner.

A Limited Liability Company (LLC) is formed by one or more individuals or entities through a special written agreement. The agreement details the organization of the LLC including: provisions for management, assignability of interests, and distribution of profits or losses.

A Corporation is a more complex business structure. As a chartered legal entity, a corporation has certain rights, privileges, and liabilities beyond those of an individual. Doing business as a corporation may yield tax or financial benefits, but these can be offset by other considerations, such as increased licensing fees or decreased personal control. Corporations may be formed for profit or nonprofit purposes.