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Quasi-Corporation / Quasi-Partnership
The hallmark of a business Corporation is the limited liability afforded to its owners, the shareholders. This is because a Corporation is regarded as having a separate legal existence from its stockholders - that is, it is capable of making contracts, owning property, suing/being sued, and the like. Thus, under normal circumstances, a Corporation, as a separate legal entity, and not its stockholders, is responsible for the Corporation’s own corporate debts and obligations. By way of contrast, each of the partners of a Partnership is subject to unlimited personal liability with respect to the debts of the Partnership. In order to maintain the shield of limited shareholder liability, a Corporation must, among other things, observe basic formalities such as maintaining corporate records (e.g., minute book, conducting annual shareholder meetings/actions by consent in lieu of such meetings, etc.). Our Corporate Kit and Compliance Services can help you meet these requirements.
In deciding where to incorporate, some of the factors you may wish to consider include: The location of your physical facilities; The cost of incorporating in the State in which the business is operating versus the cost of incorporating in one State and qualifying to do business as a foreign Corporation in the State of operation (this decision often boils down to a comparison of such costs with respect to the State of operations and such business friendly jurisdictions as Delaware, Oregon, and Arkansas); The advantages and disadvantages of the business laws and tax structure of each of the States under consideration. A Corporation that is organized in one State and qualifies to do business in another State is subject to applicable annual franchise taxes and fees assessed by each State. Thus, the actual advantage of incorporating in a State with very low or no corporate income tax is not as great as it might first appear, particularly if your business must still qualify to do business in the State in which it is operating.
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Main types of business entities in USA
C-Corporation is the most commonly used type of corporations suitable for businesses of any size. C-Corporations can have any number of shareholders. Shareholder's assets protected from the creditors of the corporation since the liability of the shareholders is limited to the amount contributed by them to the capital of the Corporation. The only disadvantage of C-Corporations is double taxation as profits are taxed first as income to the corporation, then as income to the shareholder when distributed as dividends. In some cases small corporations having not more than 75 shareholders can obtain S-Corporation status. If a corporation has S-Corporation status, it is treated as a Partnership or a Limited Liability Company for tax purposes. S-corporations are not separately taxable entities, so the income is "passed-through" to the shareholders. In cases where intended activity of the Corporation is connected with education, charity, or scientific activity there is an opportunity to establish a Non-Profit Corporation. Net profit of such corporation is not subject to taxes if it is destined for corporate purposes and is not allocated between the shareholders, directors or other officers.
The United States Limited Liability Company (LLC) is not a partnership or a corporation. It is a distinct business entity that offers an alternative to partnerships and corporations by combining the corporate advantages of limited liability with the partnership advantage of pass-through taxation. U.S. LLCs with non-resident members and which conduct no business in the USA and which have no U.S.-source income are not subject to USA federal income tax and are not required to file a USA income tax return. U.S. Limited Liability Companies are popular vehicles for conducting international business.
This type of business organization combines the corporate advantages of limited liability with the partnership advantage of pass-through taxation.
The most simple type of partnership is a Sole Partnership. A Sole Partnership is a business entity connected with the sole owner. In this case the owner runs the business on his own behalf.
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