Business Formation
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Business Formation
Legal Structure
Sole Proprietor: Includes individuals who are in business for themselves and household employers.
- Sole Proprietor: A sole proprietorship is a business that has only one owner and is not incorporated or registered with the state as a limited liability company (LLC). A sole proprietor can be a self-employed individual or an independent contractor. Sole proprietors (self-employed individuals) report all business income and expenses on their individual tax returns (Form 1040, U.S. Individual Income Tax Return, Schedule C, E, or F). A sole proprietor may or may not have employees.
- Household Employer: You are a household employer if you have hired someone to do household work andthat worker is your employee. Household employees include: babysitters, nannies, au pairs, cleaning people, housekeepers, maids, drivers, health aides, private nurses, caretakers, yard workers, and similar domestic workers.
Partnerships: Includes partnerships and joint ventures.
- Partnership: A partnership is a relationship existing between two or more persons or groups who join together to carry on a trade or business. Each partner contributes money, property, labor, or skill, and expects to share in the profits and losses of the business.
- Joint Venture: A joint venture is a partnership formed between two or more business entities. These businesses share risk or expertise on a specific project or group of projects.
Corporations: Includes S corporations, personal service corporations, real estate investment trusts (REIT), regulated investment conduits (RIC), and settlement funds.
- Corporation:A corporation is a person or group of people who establish a legal entity by filingarticles of incorporationwith the state’s secretary of state granting it certain legal powers, rights, privileges, and liabilities.
- S Corporation: The income of an S corporation generally is taxed to the shareholders of the corporation rather than to the corporation itself.However, an S corporation may still owe tax on certain income.
- Personal Service Corporation: A personal service corporation involves services in the fields of health, law, engineering, architecture, accounting, actuarial science, performing arts, or consulting.
- Real Estate Investment Trust (REIT): A REIT is an investment vehicle established for the benefit of a group of real estate investors.
- Regulated Investment Conduit (RIC): A RIC is a regulated investment company that applies to any domestic corporation that meets certain criteria.
- Settlement Fund (under IRC Sec 468B): A settlement fund is established for the principal purpose of settling and paying claims against the electing taxpayer under Internal Revenue Code (IRC) Section 468B.
Limited Liability Company (LLC): A limited liability company (LLC) is a structure allowed by state statute and is formed by filing articles of organization with the state.
- A limited liability company (LLC) is a structure allowed by state statute.
- An LLC is formed by filing articles of organization with the state’s secretary of state office.
- An LLC must be unique in its state. There can be no more than one active LLC with the same name in the same state.
- For federal tax purposes, an LLC may be treated as a partnership or a corporation, or be disregarded as an entity separate from its owner.
- An LLC can have two or misremembers (multi-member) or one member (single member).
- An LLC can have an unlimited number of members.
- An LLC’s members may include individuals, corporations, other LLCs, or foreign entities.
Estate: An estate is a legal entity created as a result of a person’s death.What it is…
- An estate (or decedent estate) is a legal entity created as a result of a person’s death.
- The estate consists of the real and/or personal property of the deceased person.
- The estate pays any debts owed by the decedent and distributes the balance of the estate’s assets to the beneficiaries of the estate.
- An estate arises on a person’s death whether the person died with or without a will.
Trusts: All types of trusts, including conservatorships, custodianships, guardianships, irrevocable trusts, revocable trusts, and receiverships.
- Bankruptcy Estate (Individual)
- Charitable Lead Annuity Trust
- Charitable Lead Unitrust
- Charitable Remainder Annuity Trust
- Charitable Remainder Unitrust
- Conservatorship
- Custodianship
- Escrow
- FNMA (Fannie Mae)
- GNMA (Ginnie Mae)
- Guardianship
- Irrevocable Trust
- Pooled Income Fund
- Qualified Funeral Trust
- Receivership
- Revocable Trust
- Settlement Fund (under IRC Sec 468B)
- Trust (All Others)