Back to Business Basics: Business Entities 101
Corporation. It’s a word we’ve all heard many times. But, often, “corporation” is used as a substitute for “business entity.” This leads to confusion among many who aren’t involved in the business world. In fact, “corporation” is only one of any number of business entities.
The primary reason that many business owners use a corporation, limited liability company, or other business entity is to protect their personal assets from business debts and creditors. When a business entity is created, structured, and used properly, a business owner can limit the risk to money she’s invested and left in the business entity.
Unfortunately, it can be difficult to decide which business entity is right for you. First off, there’s literally an alphabet soup of different business entities you can choose from: GP, PA, LP, LLP, LLLP, LLC, PLLC, and Inc., to name a few.
Second, the differences in taxation, corporate structure, or compliance rules between these business entities range from minor to meteoric, and to the uninitiated, deciphering these differences can be a Sisyphean task.
Despite the difficulty, being able to differentiate between the various business entities is a must for any entrepreneur.
To help you decide which business entity is right for you, we’ve put together this simple infographic.