ENTR 502 | Session 2 | Corporate Structures
A business entity is a legal designation that establishes a company's separate existence. Choosing the right structure is vital because it determines taxation, management frameworks, and the protection of personal assets.
Simple structures such as sole proprietorships and partnerships are relatively easy to form but often involve unlimited liability or lack long-term business continuity.
Conversely, Limited Liability Companies (LLCs) and corporations (C-corps and S-corps) provide greater liability protection, though they differ significantly in tax treatment, ranging from pass-through taxation to the "double taxation" faced by C-corporations.
The formation process generally involves registering with a Secretary of State, obtaining an Employer Identification Number (EIN) from the IRS, and ensuring foreign entity registration if the business operates outside its home state.
Furthermore, selecting a jurisdiction such as Delaware, Nevada, or Wyoming can offer additional strategic benefits, including enhanced privacy and more favorable tax laws.
