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When forming a business or simply being in the business world, there are many different entities and organizations. It can be overwhelming trying to understand what qualifies as a corporation or a partnership. Then there are other options such as a LLC. No matter what business formation you desire to build, the attorneys at Henry & Beaver can help you through the process.
Corporations, also known by the title C corporations are a legal entity that is owned by the shareholders and is consider to be independent. This is important, as the corporation may be held legally responsible for some action, but the shareholders will not be help liable for the actions of the business.
Typically, corporations are used to establish larger companies as there are complex administrative fees, tax obligations, and other legal requirements. Due to this, many corporations offer ownership through shares that can be bought via stock offerings.
A partnership is simpler than a corporation in its structure. It is a single business involving two or more people that share ownership. Each partner is expected to contribute to all aspects of the business, including labor, property, money, and skills. As a return for the shared responsibility, each partner shares in the profits and losses of the company.
As each decision is made by the partners coming to an agreement, it is important to have a legal partnership agreement that explains how the business will run, documentation for future decisions, change in ownership, and the dissolution of the partnership. It is not a wise decision to operate in a partnership without an official, legal agreement between the partners.
A LLC is known as a limited liability company. This particular structure is a combination of a corporation and a partnership. A it is a limited liability company, the owners, referred to as members, will not be held liable for the actions of the company, like a corporation, but have the simplified tax regulations of a partnership.
Each state has their own laws regarding the formation and maintenance of a LLC, so it is best to discuss your plans with a local business attorney. The members can include single individuals to corporations and other LLCs.