Creating A New Business Entity
In my business life, I have only created two types of business entities: A sole proprietorship and a corporation. In a sole proprietorship, you are not allowed to use the Inc. behind your name. It is also considered a “doing business as” name, i.e. Brian Satterlee doing business as Satterlee Marketing. This means that you personally are responsible for any liability resulting from the operation of your business. You typically register a sole proprietorship with your county agency, run a announcement in the newspaper, then get paperwork from the county so you can open a bank account. A sole proprietorship is reasonably inexpensive to start and you fill out a schedule C on your tax returns for profit and loss.
A corporation, on the other hand, allows you to put the Inc. behind your name, such as Satterlee Marketing, Inc., and is treated like a separate person. You register for an EIN with the IRS and file its taxes separately from yours. Since a corporation is separate from you, it also shelters you from liability provided you follow the rules for a corporation. I used MyCorporation to set up my corporate name and it was around $100. Corporations are usually set up with the state rather than a county. Follow the link below to learn more.
Because I have not dealt as much with LLC’s and other business entities I am not going to try to write about them. Check out this link from the IRS though:
In starting a new business, I would be concerned with liability and professionalism. This is why I chose a corporation as my new business. Corporations look much more professional than sole proprietorships and, because they act as a separate entity, they force more responsible behavior with personal versus corporate assets. There might be other entities that are more fitting for your situation so you might want to chat with an attorney to come up with the right one.