Create Your Business Entity

A business structure in which a single individual owns all assets and assumes full personal responsibility for the enterprise’s debts, liabilities, and obligations.

This type of business is neither incorporated nor formally registered as a separate legal entity. While formal registration is not required, some sole proprietors may choose to operate under a registered trade name or “Doing Business As” (DBA) designation to enhance branding or market presence.

Some things to consider:

• Many entrepreneurs opt for sole proprietorship because it is the easiest and least expensive to form.
• The business owner has full control making all decisions. However they also assume full responsibility for the business debts, liabilities, and obligations.
• For more information on business entity types, visit the SCC.

A Limited Liability Company (LLC) is an unincorporated association of one or more members (the owners) who share in the profits and losses of the company’s business.

An LLC is a separate legal entity and, generally, the members and managers are not liable for the obligations of the limited liability company.

Some things to consider:

• The owner’s personal assets are generally protected from personal liability.
• Less startup costs compared to an S-Corp but requires more paper work and costs than a sole proprietor.
• Members of an LLC are considered self-employed and are subject to self employment tax.
• For more information on business entity types, visit the SCC.

A corporation is an artificial person or legal entity managed by a board of directors, consisting of one or more individuals, who collectively elect officers to run the corporation’s day-to-day business activities.

There are two types of corporations in Virginia, stock corporations, which are authorized to issue shares to persons who become shareholders, the owners of the corporation, and nonstock corporations, which may have members, but not owners.

What are some of the benefits of operating as a corporation over other business types?

Some things to consider:

• Generally offers the strongest protection to its owners from liability and potential tax advantages.
• Corporations can raise capital through sale of stock.
• The cost for incorporating is typically higher than other business entities.
• For more information on business entity types, visit the SCC.

A limited partnership is a type of partnership distinct from a general partnership, formed by two or more persons with at least one general partner and one limited partner.

The general partners exercise control over the management of the limited partnership’s business. The limited partners contribute money, property and/or services in return for an interest in the partnership, and share in the profits and losses of the limited partnership with the general partners in accordance with a written partnership agreement or, if there is none, the value of the unreturned contributions made by each partner.

Some things to consider:

• Generally, the limited partners are not liable for the obligations of the limited partnership.
• For more information on business entity types, visit the SCC.

A general partnership is an association of two or more persons to carry on, as co-owners, a business for profit.

Each partner contributes money, property and/or services in return for an interest in the general partnership, shares in the profits and losses of the general partnership’s business, and has equal rights in the management and conduct of the partnership’s business.

Some things to consider:

• Generally, while each partner contributes money, property and/or services in return for an interest in the general partnership, each partner is liable for the obligations of the general partnership.
• For more information on business entity types, visit the SCC.

A registered limited liability partnership (sometimes referred to as a limited liability partnership) is a status granted to a general partnership or a limited partnership that has registered for such status in the jurisdiction of its formation.

Some things to consider:

• Upon registration, the partners of a general partnership and the general partners of a limited partnership are not liable for the obligations of the general partnership or limited partnership that arise after registration.
• For more information on business entity types, visit the SCC.

A business trust is an unincorporated association whose governing instrument, sometimes referred to as a declaration of trust, provides that one or more trustees will manage property or conduct for-profit business activities on behalf of one or more beneficial owners.

• For more information on business entity types, visit the SCC.