As society grows more complex, demands on business expand. State and federal laws and regulations affecting business multiply, giving rise to ever increasing risks of liability and loss unrelated to the economic performance of a business. The legal form in which a business operates has become more crucial than ever.
The choice of entity has itself grown more complex. Principal choices now include: sole proprietorship; general partnership; limited liability partnership; limited partnership; limited liability limited partnership; limited liability company; business trust; stock corporation; membership corporation; Subchapter S corporation; close corporation; and professional corporation. Each has its advantages and disadvantages. Each is designed to address certain business problems.
Whether starting a new business, expanding an existing business, or pursuing a strategic alliance or joint venture, selection of the proper form in which to conduct business can contribute significantly to achieving the goals of the enterprise. It can also minimize conflict among participants and reduce or eliminate risk of personal liability.
An informed choice of entity is a part of prudent business planning. To assist such planning, in the following pages we briefly describe the principal forms of business entities. These descriptions are not a substitute, of course, for consultation with your business advisers. Rather, they are intended to provide information that will assist you in working with your business advisers to select the type of entity that best meets your needs.