Types Of Business Entities
Business entities are organizations, which are involved in the business sector as per the company law of the country. The business entities in United States carry certain titles based on their nature of management. The major types of business entities that are discussed in the following paragraphs are Sole Proprietorship, General Partnership, Limited Liability Company, Subchapter S Professional Corporation and Limited Liability Partnership. * Sole Proprietorship The business entities, which are owned managed and controlled by a single person, are called Sole Proprietorship. These types of business entities have no different existence than their owner. There is no need to file any separate tax returns. The only thing that is required from the owner of this type of business entities is that they are supposed to get a trade name registered with the appropriate authorities. The main problem with these types of business entities is that raising capital is very difficult. One is bound by his credit score and cannot take more loans for his company as permitted. The owner of such business entities is also responsible if something is amiss with the company and someone drags the company to a court of law. * General Partnership The business entities, which are owned, managed and controlled by a group of people, are called General Partnership. These business entities are similar to a sole proprietorship in as much as that all the responsibilities, legal aspects and taxation fall on the partners. The partners of these kinds of business entities are responsible for all the credit taken by the company. All partners may be able to raise money from their credit ratings and finance the company at once in certain cases. * Limited Liability Companies The third type of business entities that are to be discussed here are Limited Liability Companies. They can carry the corporate qualifier LLC with their name, for example, XYZ Enterprises, LLC. These business entities are much more flexible in their management affair as compared to the Corporations. The main feature of these business entities is that the liability of the business owners is much limited as compared to a sole proprietorship or a general partnership. The management has much more control over these business entities as compared to corporations where the shareholders get a lot of powers and there is always the risk of hostile takeovers. * Subchapter S Professional Corporation The business entities falling in the category of Subchapter S professional corporation are a form of LLC, which is filing the taxes of the company as per the terms and conditions given in the Internal Revenue Code's Chapter 1, Sub Chapter S. * Limited Liability Partnership The business entities falling in the category of Limited Liability Partnership are those companies, which have the characteristics of both an LLC and a General Partnership. |
