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Deciding How to Register a Company

The answer to, How to register a company? depends on the organizational structure that you choose for your company, such as a corporation, a general partnership, etc. All of these company structures are also referred to as "business entities." The term "register" refers to the process of filing the papers necessary to register your new company as a legal business entity.

Each form of business entity offers different protections and operational requirements. The following sections summarize the differences between the most common types of business entities. You will find in-depth information on all of these forms of business registration elsewhere on this site. Registration for any common form of business entity can now be done on the Internet.

These descriptions assume the creation of a basic business entity. If there is an aspect of an organizational model that does not provide the level of protection you need for your business, you may be able to write a separate agreement or bylaw that will solve that issue.

Sole Proprietorship

Formation: No state filing is required. Duration of operation: Business is dissolved if sole proprietor dies or retires. Liability protections: Sole proprietor has no liability protection. Operation bylaws: Minimal legal requirements for operation of business. Management requirements: Management/operations solely controlled by proprietor. Taxes: All taxes are directly levied upon and paid by the sole proprietor. Pass-through status: All profits and losses pass through to be claimed by proprietor. Double taxation: There is no double taxation. Filing costs: Creation of a sole proprietorship does not require a legal filing or fees. Obtaining financing: Difficult to arrange loans not backed by proprietor's assets. Transfer of ownership/stock: Ownership cannot be transferred.

General Partnership

Formation: No state filing is required. Duration of operation: Business dissolves if one partner dies or retires. Liability protections: Partners have no liability protection. Operation bylaws: Minimal legal requirements for operation of business. Management requirements: Partners generally have equal authority. Taxes: All taxes are directly levied upon and paid by the partners. Pass-through status: All profits and losses pass through to be claimed by partners. Double taxation: There is no double taxation. Filing costs: Creation of a general partnership does not require a legal filing or fees. Obtaining financing: More partners can be added to increase partner contributions. Transfer of ownership/stock: Ownership cannot be transferred.

C Corporation

Formation: Filing with the state is required. Duration of operation: Company can exist in perpetuity. Liability protections: Shareholders are generally not personally liable. Operation bylaws: Board of directors, officers, annual meetings and reports. Management requirements: Directors manage and are elected by shareholders. Taxes: Taxes are levied directly on the business. Pass-through status: Company profits and losses are not claimed by shareholders. Double taxation: Shareholders are double taxed on dividend distributions. Filing costs: Incorporation fees are paid to state. Obtaining financing: Shares of stock can be sold to raise capital. Transfer of ownership/stock: Shares of stock can be bought and sold.

S Corporation

Formation: Filing with the state is required. Duration of operation: Company can exist in perpetuity. Liability protections: Shareholders are generally not personally liable. Operation bylaws: Board of directors, officers, annual meetings and reports. Management requirements: Directors manage and are elected by shareholders. Taxes: All taxes are directly levied upon and paid by the shareholders. Pass-through status: All profits and losses pass through to be claimed by shareholders. Double taxation: There is no double taxation. Filing costs: Incorporation fees are paid to state. Obtaining financing: Shares of stock can be sold to raise capital. Transfer of ownership/stock: IRS regulates the buying/selling of S corp stocks.

Limited Liability Company - LLC

Formation: Filing with the state is required. Duration of operation: Depends on the state in which LLC is formed. Liability protections: Members are generally not personally liable. Operation bylaws: Depends on the state. Fewer requirements than for a corporation. Management requirements: Members write a management outline for operations. Taxes: All taxes are directly levied upon and paid by the LLC members. Pass-through status: All profits and losses pass through to be claimed by the members. Double taxation: There is no double taxation. Filing costs: Fees are paid to state to file as a limited liability company. Obtaining financing: Interests in company can be sold, by agreement. Transfer of ownership/stock: Must be spelled out in a separate agreement.


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Want more information about registering a company? Visit our Guide. Check out incorporation fees by each state.

Tip: Did you know that Delaware and Nevada are top two incorporation states?

Ready to register a company? Choose one of these great online incorporators:

 Business Filings
 The Company Corporation
 My Corporation
(Intuit®)
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