New Business Formation
Forming a new business involves many decisions. One of the major decisions is what type of entity the business should be. Joseph Castellano and his Staff are experienced with the various entity types, along with the respective paperwork involved.
The entity types are:
Sole Proprietorship – The sole owner is personally liable for any judgments, debts, or other liabilities of the business. The business profits or losses are reported on the owner’s personal income taxes.
General Partnership – The partners are jointly and personally liable for any judgments, debts, or other liabilities of the business. Each partner’s share of the business profits or losses is reported on the partner’s personal income taxes.
Limited Partnership – In addition to General Partners, Limited Partners are investors who have a limited liability for any judgments, debts, or other liabilities of the business. Their liability is limited to the total amount of their investment, and they can leave the business without causing the business to dissolve.
Regular Corporation – Owners of a regular corporation have limited liability for judgments, debts, or other liabilities. Business profits may be split between the owners. Taxes are paid by the business.
S Corporation – Owners of an S corporation have limited liability for judgments, debts, or other liabilities. Owners share the net profits and losses of the business and report their share on personal income taxes. This is based upon the ownership interest of the owners.
Professional Corporation – State licensed professional owners are not personally liable for the malpractice of the other owners. Every owner must be in the same profession as the other owners.
Nonprofit Corporation – A nonprofit corporation does not pay income taxes on money it receives for charitable purposes, and donors may deduct their donations from income taxes. The full tax benefits and advantages can only be utilized by businesses that have been incorporated for an educational, charitable, religious, scientific, or literary purpose.
Limited Liability Company (LLC) – Business profits and losses can be allocated to the owners along different lines than ownership interest. Owners can choose if the LLC will be taxed as a corporation, or a partnership.
Limited Liability Partnership (LLP) – Partners are not liable for the malpractice of other partners, but remain liable to business creditors and lenders. Partners take their share of loss or gain on their personal income taxes.