➼ Partnerships: two or more people carrying on as co-owners of a business for profit.

➼ Limited Partnerships: a general partner + a limited partner. General partners manage the daily operations of the business and are liable jointly and severally for all obligations of the limited partnership unless otherwise stipulated in the partnership agreement or by law. The limited partner usually supplies financial backing. 

➼ Limited Liability Partnerships: partners are not liable for negligent acts committed by other partners or employees who are not under their direct control. In New York, each partner must be a professional authorized by the law (i.e., attorneys). 

➼ Corporations: a legal entity separate from its owners aka shareholders. A corporation acts like a person with certain powers including the capacity to sue and be sued. 

      ❥ “C” Corporations vs. “S” Corporations: C Corps are legal entities with their own money accounts, properties, and tax liabilities separate from the shareholders.  Their profits are taxed when earned and then taxed again when the profits are distributed to the shareholders in the form of dividends. This is known as “double taxation.” S Corps avoid double taxation by adopting a pass-through system. All incomes and losses are passed through to the shareholders to report on their individual tax returns. C Corps allow for different classes of stock that dictate priorities of returns while S Corps do not. S Corps limit the number of shareholders to 100 while the limit does not exist in C Corps.

      ❥ Public Corporations vs. Close Corporations: Public corporations have many shareholders who trade shares on a national securities exchange or over-the-counter market maintained by securities dealers. Close corporations are not publicly traded although they may be large in size.

➼ Limited Liability Companies: A limited liability company is a hybrid between a partnership and a corporation. It has the limited liability characteristics of a corporation and the pass-through taxation nature of a partnership. A limited liability company must provide notice to the world of the company’s limited liability status by including abbreviations such as “LLC,” “LC,” or “Ltd. Co.” in its name. Di Ma's Law Firm is a professional limited liability company.

Read Basic Business Forms by Attorney Di.

Every person transacting business in New York State must file with the Department of State. The timeline for starting an LLC is shown below as an example.

Yes because businesses such as LLCs offer personal liability protection to their owners. Creditors may not access the owners' personal financial assets if the company goes into debt or is sued. Note the corporate veil can be pierced if personal and business financial accounts are comingled or fraud has been committed.

LLCs offer the protections of a corporation without the requirements for formalities. There is less paperwork involved because there is no requirement to have a board of directors, keep meeting minutes, or hold shareholder meetings. LLCs are subject to pass-through taxation by default and avoid the double taxation issue associated with corporations (members pay federal income taxes, not the LLCs). However, LLCs may elect to be taxed as either a C corp or an S corp, which may be beneficial to the owners.