Selecting an Entity
Incorporating is a very important aspect of running your business. Part of this process is determining which type of
corporate entity will best suit your needs and the needs of your company. Because there are several to choose from,
we have outlined the most popular entities you will encounter and provided information about each one.
C-Corporation
Probably the most popular and commonly used entity in the United States is the C-Corporation. When forming a
C-Corporation, you are creating a legal entity which is owned by it's shareholders.
The benefits of using a Nevada based C-Corporation come in the form of asset protection. The corporate veil, created by the
laws of the State of Nevada, have developed a strong barrier which separates the assets of the corporation from the personal assets
held by the shareholders. In the event the corporation is ever sued, the corporation is responsible
for any and all debts and liabilities, not the shareholders.
To read more about the incorporation process, visit our
Nevada C-Corporation page.
Limited Liability Company (LLC)
The Limited Liability Company, more commonly referred to as an LLC, came about as a result of businessmen and businesswomen searching
for the asset protection that a C-Corporation provides with the added benefit of the pass-through taxation laws of the
Limited Partnership.
An LLC can be either Manager-Managed or Member-Managed. In a Manager-Managed LLC, the company is operated by appointed
Managers. In a Member-Managed LLC, the company is operated by the owners of the LLC.
To read more about Nevada Limited Liability Companies, please visit our
Nevada LLC page.
Limited Partnership (LP)
A Limited Partnership, or LP, is a partnership between two or more persons/entities. They consist of one or more General Partners,
and one or more Limited Partners. The General Partner(s) control the operations of the company. The Limited Partner(s) typically play
a passive role in the partnership. Limited Partners in a Limited Partnership are typically investors. One of the primary benefits of the LP is that the
profits of the partnership flow directly through to the partners and show up as ordinary income (pass-through taxation).
When deciding whether or not a Limited Partnership is right for you, it is important to keep in mind that, while the General
Partner does maintain control over operations, they are also exposed to unlimited risk. This means that if the Limited Partnership is ever
involved in a lawsuit, the General Partner can be held liable for all debts and claims against the partnership. In order
to limit the personal risk one might be exposed to, often times you will see the General Partner appear in the form of a
Corporation.
On the other hand, the Limited Partner maintains Limited Liability. This means that, in the event the Limited Partnership
is ever sued, the Limited Partners liability is limited to their investment in the partnership. This can be very beneficial
in situations where investors require a limited amount of risk on their part.
To read more about Nevada Limited Partnerships, please visit our
Nevada Limited Partnership page.
Limited Liability Limited Partnership (LLLP)
A Limited Liability Limited Partnership, or LLLP, is a relatively new development in the corporate world. It's
structure is similar to that of the Limited Partnership in that it can have one or more General Partners and one
or more Limited Partners. As with the standard LP, the General Partners manage the operations of the LLLP, while the
Limited Partners typically play a passive role. Once again, with the LLLP, the profits of the partnership flow directly
through to the partners and show up as ordinary income (pass-through taxation).
All of that being said, with the LLLP, the General Partner(s) and the Limited
Partner(s) both have limited liability for any debts or claims against the partnership. This means that in the event
the partnership is ever sued, both the General Partner(s) and the Limited Partner(s) are protected.
To read more about Nevada Limited-Liability Limited Partnerships, please visit our
Nevada LLLP page.