How Do I Form a Business Entity?

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A new business can choose from a wide range of business entity structures. Most provide the owner some degree of limited liability - insulating personal assets from access by creditors, customers, or business partners. There are many several main types of business entities: corporations, limited liability companies, and partnerships. The former two need to be registered with the Secretary of State in which they are created; the latter generally does not.

Most corporations, known as “C Corporations,” are taxed as its own entity, but “S Corporations” can “pass through” all tax liabilities to their owners. Setting up a corporation requires the creation of Articles of Incorporation (filed with the state) and operating bylaws and resolutions (not filed with the state). Corporations tend to have more administrative requirements than limited liability companies, the other main option.

Limited liability companies can be treated as corporations for tax purposes, or “pass through” all tax liabilities to their owners. Setting up a limited liability company requires creating Articles of Organization (filed with the state) and an Operating Agreement (not filed with the state).

After creating your business entity, you will almost certainly need to get some combination of federal, state, or local business licenses in order to lawfully operate your business.

If you want to create your own business organization documents or license documents from a professionally prepared form, or get attorney or tax help in the process, we suggest using LegalZoom.