Choosing the right entity for your business is crucial, we've put together the basic entity types and detailed the differences for you.

1. Forming A Business Entity
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2. What Is A Business Entity?
• A “Non-Real Person”
• Legal entity
• As an owner you act on behalf of the
business
Forming A Business Entity 2

3. Business Legal Structures & Name
• Determine your business’s legal
structure:
3Forming A Business Entity
Sole
Proprietorship
Partnership
(many types)
Limited
Liability
(many types)
Corporation

4. Sole Proprietorships
• For profit business owned by one
person
– Easiest business to set up and operate
– Profits are taxed once
– Unlimited liabilities
– Business ends at death of owner
4Forming A Business Entity

5. Partnerships
• A business owned by any two or more
persons who contribute money, labor
and skill to a business and share in
profits, losses, and management
– Profits are taxed once
– Liability is shared among partners
5Forming A Business Entity

6. Corporations
• A business formed under state and
federal law. It is treated legally as a
taxable entity, distinct from the
individuals who own it.
– Most complex form of business to set up and
operate
– Profits may be subjected to double taxation
– Owner/Officers have limited legal liability
– Business continues after death of owner(s)
6Forming A Business Entity

7. Limited Liability Company (LLC)
• A hybrid business structure composed of
aspects of a partnership and corporation.
• Owners are shielded from personal
liability and profits and losses pass
directly to the owners without taxation of
the entity itself.
– Moderately easy to set up and operate
– Passed through taxation
– Owner/Officers have limited legal liability
– Business may choose to terminate upon death
or withdrawal of member (dependent on
operating agreement)
7Forming A Business Entity

8. Federal, State, & Local Taxes
8
Federal State County & City
Payroll taxes Sales & Use taxes Property Taxes
Income taxes Permits Permits
FICA
Unemployment
Insurance
Franchise Tax
Forming A Business Entity

9. Federal, State, & Local Resources
• Federal:
– IRS
– OSHA
– Equal Employment Opportunity Commission
• State:
– Comptroller’s Office
– Secretary of State
– Texas Workforce Commission
• Local:
– San Antonio Economic Development Center
– County Clerks Office
9Forming A Business Entity

10. Get Connected & Learn More
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Email: smallbiz@mygenfcu.org
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business tips to help you reach your money goals