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.

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. .

• SOLE PROPRIETORSHIP

• PARTNERSHIP / JOINT VENTURE
• LIMITED PARTNERSHIP (LP)
• LIMITED LIABILITY PARTNERSHIP (LLP)
• LIMITED LIABILITY COMPANY (LLC )
• S CORPORATION
• C CORPORATION (REGULAR CORPORATION)
• NONPROFIT CORPORATION - A nonprofit corporation is an entity formed under state law for a socially beneficial, not-for-profit, purpose that has elected and been qualified to be treated as exempt from federal taxation due its social purpose.

  PROS:

  • The personal liability of nonprofit organization organizers is limited to their contribution of capital to the organization, which means that if someone sues the business and wins, they can attach a judgment against the capital contribution of the organizer(s), but not the personal assets of the organizer(s) (unless the corporate veil is pierced).
  • Nonprofit organizations are exempt from federal and state taxation.

CONS:

• There are corporate formalities to conduct and maintain, such as organizational and annual meetings, corporate minutes, etc.
• Tax-exempt status must be applied for on IRS Forms 1023 or 1024 and at the state level.
• Specific rules must be followed in order to maintain nonprofit organizational status.