Corporations are taxed on the profits they make. Your corporation will be required by law to keep extensive records of its operations. Only a corporation can sell shares publicly on the stock market after issuing an initial public offering.įorming a corporation costs more in fees, and there is more paperwork involved. Corporations can raise money by selling shares in the business. Owners, called shareholders, can sell or give up shares without interrupting the company's daily operations.īecause of the complete separation between owners and the company, starting a corporation is a good option if you are starting a higher-risk business. Corporations can be taxed on their profits and can be held legally liable for debts or breaking laws and in lawsuits. This is a common organization for professionals like lawyers and accountants.Ī corporation, or C corp, is an independent legal entity that is completely separate from its owners. They are also protected from the actions of the other partners. In a limited liability partnership, every partner has limited liability, so they are all protected from being personally responsible for company debts. Profits from the partnership are paid through personal tax returns, and the general partner is considered self-employed for Medicare and Social Security contributions. In most LPs, the general partner also has the most control of the company, which is specified in a written partnership agreement. In a limited partnership, one partner has unlimited liability and is known as the general partner, while the other partners have limited liability. Like sole proprietorships, a partnership is a good way to start a business quickly before adopting a more formal organization model. There are two kinds of partnerships from which to choose: limited partnerships and limited liability partnerships. If you're going into business with one or more other people, a partnership is the easiest organization to set up.
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