Doing
business in the United States is easy.
To start a business, all you need to do is put up a sign. You
can operate by yourself as a sole proprietor, with others as a
partnership, or in a formal entity such as a corporation or Limited
Liability Company (LLC).
As a sole proprietor, there
are few legal formalities - if operating under an assumed name,
you may need to register (usually at the county level.)
Partnerships are also easy
to set up. There has to be a partnership agreement which is the
agreement (basically your own private law) which governs the relationship
between the parties - who signs the check book, how many people
are needed to make a decisions, who gets what percentage, etc.
Generally partnerships usually do not need to register anywhere
except maybe at the county level. Limited partnerships (more formal)
are more like corporations and usually require registration at
the state level and the services of a registered agent.
Corporations and LLCs require
more work and are a little more expensive - why should anyone
bother?
Personal liability! When a corporation enters
into a transaction, as long as the shareholder signs the contract
as an officer of the corporation, it is the corporation and not
the shareholders who is responsible. As a rule, a shareholder's
liability is limited to the amount invested into the company.
So if you invested $20,000 and the corporation looses $200,000,
you will not be responsible for any of the money. You will only
lose the $20,000 you originally invested. Creditors cannot reach
beyond the assets of the company in normal circumstances. The
same is true with lawsuits. It is the corporation not you who
will be sued. |
