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BUSINESS FORMATION & PLANNING

	Why should you spend precious resources on business planning? Launching a new business venture is one of the most exciting and challenging events of a career. With risks and pitfalls at every turn, the wise entrepreneur invests in up front planning so that their business is built on a solid foundation. Planning on the front end means less headaches and unexpected problems once your business is up and running -- a time when you can least afford the time and expense of putting out fires.
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	BUSINESS ENTITY DESCRIPTIONS The following list provides a brief description of the most common types of entities available in most jurisdictions, i.e., Sole Proprietorship , Partnership/Joint Venture , Limited Partnership (LP) , Limited Liability Partnership (LLP) , Limited Liability Company (LLC) , S Corporation , C Corporation (regular corporation) , and Nonprofit Corporation . The descriptions explain some of the pros and cons applicable to these various types of entities. Notably, the list proceeds from the simplest to the more complex forms of entities, and from the least to the greatest protection against personal liability. *DISCLAIMER:* This page does not provide an all-inclusive list of every type of business entity, nor a complete description of all of the issues to be considered in selecting an appropriate entity. Competent legal counsel by a licensed attorney should be obtained regarding the choice and formation of a legal business entity.
	SOLE PROPRIETORSHIP
	PARTNERSHIP / JOINT VENTURE LIMITED PARTNERSHIP (LP) LIMITED LIABILITY PARTNERSHIP (LLP) – An LLP is an entity formed under state law by two or more “individuals” associated for the purpose of conducting a business for profit. Partners in an LLP are generally personally liable for their own wrongful acts and the acts of those whom they directly supervise. However, their personal assets are protected from claims involving the wrongful acts of another partner. PROS: The personal liability of partners is limited to their contribution of capital in the LLP unless they or someone they directly supervise has acted wrongfully. There is no double taxation applicable to LLPs. LLPs are pass-through entities, which means that each partner is taxed at his or her individual tax rate for their share of the profits earned in the business, under his or her individual name and social security number. There is no business entity level tax, but the LLP should file an informational federal return ( IRS Form 1065) and K-1 forms should be sent to each partner representing their share of profits. There are no corporate formalities to conduct or maintain. All partners can participate in the management and conduct business of the LLP. CONS: Some states limit the types of enterprises that can be formed as an LLP. LIMITED LIABILITY COMPANY (LLC) S CORPORATION C CORPORATION (REGULAR CORPORATION) NONPROFIT CORPORATION
	BUSINESS PLANNING CHECKLIST

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