Sole Proprietorship

 

A sole proprietorship is the simplest business entity, with one person (or a married couple) as the sole owner and operator of the business. If you launch a new business and are the only owner, you are automatically a sole proprietorship. Freelancers, consultants, and other service professionals commonly work as sole proprietors, but it’s also a viable option for more established businesses, such as retail stores, with one person at the helm.

 

Partnerships

 

Partnerships share many similarities with sole proprietorships—the key difference is that the business has two or more owners. There are two kinds of partnerships: general partnerships (GPs) and limited partnerships (LPs). Like a sole proprietorship, a partnership is the default mode of ownership for multiple-owner businesses.

 

Corporations

 

C Corp. A C-corporation is an independent legal entity that exists separately from the company’s owners. Corporations have shareholders (the owners), a board of directors, and officers.  However, one person in a C-corp can fulfill all of these roles. This being said, with this type of business entity, there are many more regulations and tax laws that the company must comply with. Methods for incorporating, fees, and required forms vary by state.

 

S Corp. An S-corporation preserves the limited liability that comes with a C-corporation but is a pass-through entity for tax purposes. This means that, similar to a sole proprietorship or partnership, an S-corp’s profits and losses pass through to the owner's personal tax returns. There’s no corporate-level taxation for an S-corp.

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Limited Liability Company (LLC)

 

A limited liability company takes positive features from each of the other business entity types. Like corporations, LLCs offer limited liability protections. But, LLCs also have less paperwork and ongoing requirements, and in that sense, they are more like sole proprietorships and partnerships.

Another big benefit is that you can choose how you want the IRS to tax your LLC. You can elect to have the IRS treat it as a corporation or as a pass-through entity on your taxes.

 

At Grassroots, we are well-versed on the various implications of each Business entity type.  We have experience serving clients in several industries such as Real Estate, Retail, Personal Care, Transportation and others.  Let us help you determine the appropriate Business entity for you.  Book a Consultation today.