An LLC is a hybrid between a partnership and a corporation. Members of an LLC have similar operational flexibility and income benefits to a partnership, but also have limited liability. While this may seem very similar to a limited partnership, there are important legal and legal differences. It is recommended to consult with a lawyer to determine the best entity. Although small businesses can be LLCs, some large companies choose this legal structure. An example of LLC is Anheuser-Busch Companies, one of the leading companies in the U.S. brewing industry. Anheuser-Busch, headquartered in St. Louis, Missouri, is a wholly owned subsidiary of Anheuser-Busch InBev, a multinational brewery based in Leuven, Belgium. For new businesses that might fall into two or more of these categories, it is not always easy to decide which structure to choose.
You need to consider your startup`s financial needs, risks, and ability to grow. It can be difficult to change your legal structure after registering your business, so analyze it carefully in the early stages of starting your business. In Hungary, companies are mainly governed by the Companies Act of 2006, the Commercial Register Act of 2006 and the new Civil Code of 2013.  All companies must indicate their type on their behalf. The sole proprietorship is one of the most common legal structures for small businesses. Many popular businesses started as sole proprietorships and eventually grew into multi-million dollar businesses. Some examples: We have compiled the most common types of business units and their remarkable features to help you choose the best legal form for your business. You may come across another business structure called a limited liability company (LLP). In an LLP, none of the partners have personal responsibility for the business, but most states only allow law firms, accounting firms, medical practices, and other professional services firms to organize themselves as LLPs. These types of companies can organize themselves as LLPs to prevent each partner from being liable for the actions of the other. For example, if a physician commits malpractice in a physician`s office, other physicians with an LLP may avoid liability. The most common types of businesses include sole proprietorships, partnerships, limited liability companies, corporations and cooperatives.
Here you will find more information about each type of legal structure. However, the rules applicable to certain types of companies, even if they are described as roughly equivalent, differ from jurisdiction to jurisdiction. When setting up or restructuring a business, the legal responsibilities depend on the type of business entity chosen.  We have described the four most common corporate legal structures with considerations for each of the following structures, including taxes, liability, and formation of each. Ready? Think about the pros and cons of each type of business entity in terms of legal protection, tax treatment, and government requirements. « States have different requirements for different business structures, » Friedman said. « Depending on where you settle, there may also be different requirements at the municipal level. When choosing your structure, you understand the state and industry you are in.
It`s not a one-size-fits-all solution, and businesses may not know what applies to them. Also, you should keep in mind that the IRS sets certain limits and deadlines on how often you can change the entity type of your business. Also, keep in mind that various state tax plans can change the way types of business units are taxed, which can help with how taxes are factored into your final decision. The simplicity of a sole proprietorship or partnership makes one of these business structures a good starting point for freelancers and consultants, especially if the industry in which they operate carries low legal risk. Most types of legal entities are governed by a modified version of the original version of the Dutch Burgerlijk Wetboek. Of the few types of businesses that may exist under a federally issued charter, most are banks, credit unions and similar custodians. These institutions differ from state-chartered banks in that they include a keyword in their official name. For a bank, the key word is « national ». A bank licensed by the Office of the Comptroller of the Currency (OCC) must have the word « national » in its name.
A bank licensed by a State may not bear the term « national » in its name. An LLC is owned by its members, who may be one or more individuals or incorporated businesses. In an LLC, taxes are « passed on » to members, so the corporation itself does not pay taxes and individual members simply pay income tax on their own personal tax returns. A limited liability company adopts the positive characteristics of each of the other types of business units. Like corporations, LLCs offer limited liability protection. But LLCs also have less paperwork and ongoing requirements, and in that sense, they`re more like individual businesses and partnerships. Here we present the main types of business units available for your business, sole proprietorship, partnership, limited liability company and company, taking into account the advantages and disadvantages of each. In addition to being a sole proprietorship, the partnership is one of the most common types of business structures. Examples of successful partnerships include: About the author: Priyanka Prakash is an author specializing in finance, lending, law and insurance for small businesses, helping business owners make complex concepts and decisions.