Expanding a business into the United States requires an understanding of the different business forms available. Selecting the best business form for the business is important and can be accomplished by understanding the different types of businesses forms and the benefits of each.
Business form selection should be evaluated based on taxation, control of the business, cost or operating the business and liability concerns. There are several different options to choose from.
Partnership
A partnership is typically governed by a partnership agreement. It is not commonly terribly costly to operate and the earnings of the business are taxed on the personal tax returns of the partners. It does not provide personal liability protection. It is also similar to a sole proprietorship which is a business owned and operated by one person.
Corporation
A corporation can be costly to run and provide limited control for business owners but also provides complete personal liability protection. It is commonly a more regulated structure and there may be more requirements to comply with. It is also sometimes considered double taxed because the corporation pays taxes, as do the owners or shareholders. This may be different for an S-corp as compared to a C-corp so is an important are of business law to understand.
Limited liability company (LCC)
A limited liability company provides personal liability protection for the owners of the business but also allows for the owners to be taxed on their personal tax returns so no separated entity is taxed.
Business formation is an important step. Its importance should not be overlooked so that the best business form for the needs and goals of the business owner and the success and growth for the business are a good fit with the form selected.