Although all of theses common business formation types are fairly straight forward, there are slight differences that govern their creation and operation, which can vary from state to state. If you have read the information about each formation and feel confident in establishing your entity now, click on the “get my EIN” button below the formation type of your choice. There is NO COST to obtain an EIN. Employer Identification Number – EIN: A unique identification number that is assigned to a business entity so that they can easily be identified by the Internal Revenue Service.
Sole Proprietorship
This is the most simple business entity there is. As the name implies, the establishment has just one owner. That owner may choose to use his or her own name or “d/b/a”, which means, “doing business as.” The requirements are minimal – just a social security number and the necessary permits and licenses.
OBTAIN YOUR EINLimited Liability Company (LLC)
Personal asset protection. This is a popular choice for many new businesses. Limited liability Companies, (LLCs) can be owned by a variety of entities, including individuals, trusts, other LLCs, and corporations. When it is set up under the proper guidelines, an LLC can be taxed like a partnership, which is an advantage.
Creating an Operating Agreement
Operating agreements are not required under state law when forming an LLC and do not have to be filed with the state. They are very important documents to create because they help you and any other members of the LLC organize your business, plan for the future, and put all pertinent facts in writing.
An operating agreement should include:
The percentage interest each member owns in the LLC
What the rights and responsibilities of the members are, as well as the voting power each
member has
How profits and losses will be allocated among the members
How the business is going to be managed, and the rules for taking votes and holding
meetings
The specifics of when members can sell and buy shares from each other, such as when a
member dies or wants to leave the business
Corporation (Inc)
Thinking of raising capital? Hoping to go public? Expect a lot of shareholders? Then this could be a viable option to explore. Individuals have limited liability because the corporation has separate legal standing. The owners are thereby protected from personal legal action, should the business be sued.
OBTAIN YOUR EINPartnership
This formation consist when two or more individuals form a written agreement
to operate a business together. Partnerships can also be established between other businesses
and among one or more businesses and one or more individuals.