Do you know the types of companies that can open in the US?

Before you decide to start a business in the United States, know the types of businesses and their legal structures, which remain the same for US citizens,legal residents as well as foreigners. However, if you are not a citizen or legal resident there are several restrictions that you need to be aware of.

Sole Proprietorship

A Sole Proprietorship is the simplest legal business structure in the United States. It is the most common small businesses type and is easy and inexpensive to start. Legally speaking it regarded as the same entity as the individual. If the business name is the same as the owner’s name, no registration is required. But if it is different, it must be registered with the Secretary of State.

Sole Proprietorship taxes are passed directly to the owner of the company. The business does not declare an income tax.

The Sole Proprietorship owner has unlimited liability. If there is a legal action against the company, all the owner’s assets can be used to cover damages. The company only exists as long as the owner is alive or until s/he decides to close the deal. The owner has full control and assumes all risk. The transfer is very simple. Just prepare a contract of sale and transfer the goods.

General Partnership

The General Partnership is a partnership between two or more people in a business. Taxes are passed on to the members and they are responsible for the company’s debts. The General Partnership requires little formality, but it is important to have a contract that includes the terms of the partnership.

Limited Partnership (LP)

The Limited Partnership is made up of two types of members. General Partners operate the business, take responsibility for the company, and take the risks of the company. Limited Partners invest in the business and their risks are limited to invested capital. The Limited Partnership structure is appropriate for raising investment capital as this structure allows investors to participate in the business without taking on too much risk or personal liability.

Limited Liability Partnership (LLP)

The Limited Liability Partnership is similar to the Limited Partnership, except that all LLP members have limited liability. It offers the advantage of passing taxes to the owner as in a General Partnership, but also provides limited liability protection as in a Corporation.

Corporation

It is the most common business structure of large companies. They differ from the Sole Proprietorship and the Partnership because they are separate and distinct entities from the owners (legal entity). As a separate entity, Corporations have several distinct characteristics, such as limited liability, easy transfer of portions of the company and perpetual existence. The taxes are remitted by the company and are separated from the owners.

S-Corporation

S-Corporation is similar to the Corporation with respect to limit liability and easy transfer. But taxes are passed directly to the owners of the company, avoiding double taxation.

Limited Liability Company (LLC)

This structure can be formed by one or more people. Its great advantage is that it costs little to form, requires little formality and limits the responsibilities of the owners. It is quite popular with small one-man businesses that seek the advantages of Sole Proprietorship without exposing the owner’s assets.