A general partnership is usually a written agreement between two or more people. Liability in a general partnership is borne by the business, though the partners may be liable if the business runs out of money.
Limited Liability Company (LLC)
An LLC is the middle step between a corporation and a partnership, created by a written operating agreement. This is accomplished by having each partner own what is referred to as a membership interest in the company, instead of directly owning the company and all its assets. This means that each partner has limited personal liability – unless they are bound to an agreement through someone acting as the LLC’s agent. There are fees associated with the creation of an LLC, but they are generally offset by money saved by the limitations on liability.
Corporations (C and S)
Corporations are perhaps the best known form of business entity, created via articles of incorporation filed with the state. There are two different types:
- C corporations have shareholders and lack personal liability for partners, but have to contend with what tax professionals call double taxation – profits are taxed as dividends, and then taxed again on the shareholders’ income
- S corporations are taxed more in the manner of LLCs, meaning that dividend income is only taxed once, but the rules about what constitutes income are somewhat more complex.
All of these businesses may have employees without penalty, though they will be subject to employment taxes if so.
Once you have made your decision as to the format of your business, having a Monroe County business entity creation and structure attorney on your side can also help to smooth the process of registering your business with the appropriate authority. Regardless of which business entity model you choose, the appropriate notices must be filed with the county and with the Internal Revenue Service.
If you are in need of assistance in getting your fledgling business get off the ground, the Silver Law Group is happy to assist. We have years of experience and are well versed in the process of business entity creation. Contact our Islamorada office today to discuss your options.