Over the years, different types of entities have been created to fill a need perceived by the business community. At first, the only way to secure any kind of liability protection was to incorporate. The problem with incorporation was that it was so expensive and often cost prohibitive. Many decided to be partners or operate as sole proprietors as it made more sense to forego the expense and headache of forming a corporation than to have the protection against a lawsuit that might never happen. During the 80’s and early 90’s we saw the rise of the S-Election for the Corporation, the Limited Liability Partnership, and the Limited Liability Company.
Different legal entities can be used for different purposes. They each have their own set of rules that govern them and there are benefits and drawbacks to each of them. Business organizations is a semester long class in law school. Just to get an overview. So this episode is a very brief overview of the types of entities. We focus in on the entities that will be more important in your decision making process.
This episode is all about the different types of entities you can use for your startup. In this episode we talk about:
Limited Liability Partnerships
Taxes (briefly and not too painfully)
We have discussed this topic in more detail in other places. If you want to know more about any legal entity, check out these articles: