Filing

• While rules can vary from state to state, a business form does need to be filed with the particular state in which it is operating. While it is recommended to use an attorney for filing the necessary paperwork, it can be accomplished through other venues. Online companies such as Legal Zoom offer the option of creating the business filing documents for a set amount. Also, in many states, the forms are available online through a court's website. These forms may be printed out and drafted by the business owner, then returned to the instructed address for filing.
  
  

Corporations

• A corporation is a form of business ownership where the company is owned by "shareholders" who, in general, are not personally liable for the obligations of the corporation. In most cases, the only risk to the owners is the amount they initially invested in the company.
  A corporation is typically controlled by a board of directors who vote upon and delegate daily decisions and actions that effect the company. Should the original owner or anyone on the board become incapacitated, the corporation will continue operations and replace the necessary position.
  With regard to taxation, most corporations, known as C corporations, are taxed twice. This occurs because the court considers them an independent entity, so anyone working for the entity must also be taxed. In order to avoid double taxation, some companies file as an S corporation. While this filing does prevent the extra tax burden, it also has other limitations, including the amount of shareholders the company may possess.
  
  

Limited Liability Company

• A more modern approach for alleviating the double taxation burden is to file a Limited Liability Company (LLC). An LLC allows business owners to customize the characteristics they prefer from both a partnership and a corporation. The business can run similarly to a corporation with a central board and shareholders, or as a partnership with only a small amount of owners and investors.
  The LLC is treated as a corporation with regard to incapacity of owners and limited liability, and yet is accepted for tax purposes as a partnership, with single flow-through taxation.
  Some states do not allow professional businesses to use this form because of the limited liability option. Please consult a business attorney to determine particular state laws.
  
  

Partnership

• Partnerships are the oldest form of business type. Traditionally, a shop keeper could simply hang a sign on his door and be in business. Modernly, most states require that partnerships file a "statement of qualifications" that contains minimal information, such as the name of the company, contact information for the owner and proof of liability insurance.
  Liability for a partnership varies depending on the form it takes. For example, if one partner in a business does not wish to make decisions, then a limited partnership (LP) may be formed to limit personal liability to only the acting partner. All partnership forms offer flow-through taxation for owners of the company.
  
  

Nonprofit Corporation

• If the entity being created does not intend to distribute its profit to its shareholders and board members, then it can file as a 501(c), or nonprofit corporation. Nonprofit corporations are filed with the state to become a corporation and with the IRS to gain tax exemption. Examples of nonprofit corporations include Amnesty International, Food for the Hungry, Habitat for Humanity and United Way.