What Legal Entity Should I Create for my Business?
Updated: Dec 5, 2022
Today we'll highlight the most common business entities for incorporating a new or existing business in Illinois. If you are interested in learning more about these or other legal structures, you should consult an attorney and accountant regarding your business’s options.
Corporation: There are two common corporation structures, the C Corporation and the S Corporation.
C Corporation: The C Corporation is the commonly known, traditional “corporation.” The C corporation is owned by shareholders that own stock in the corporation and is managed/overseen by directors and officers. C Corporations may be the best option for a business owner that is interested in growing the business quickly through investors and ultimately selling the business, as shares in a corporation are easier to transfer than ownership interests in a Limited Liability Company.
S Corporation: The S Corporation’s largest benefit is that owners of the corporation may avoid the double taxation of the C Corporation. There are certain rules about which businesses can take advantage of S Corporation tax status. You should consult with a lawyer and accountant to determine your business’s S Corporation eligibility.
Limited Liability Company: Limited Liability Companies (or “LLCs”) are owned by members, and the members are generally shielded from personal liability for actions or liabilities of the LLC. The members of the LLC own “membership interests” in the business rather than stock. LLCs have increasingly become the more popular legal entity structure for businesses, as LLCs have less onerous corporate governance requirements than a corporation and benefit from pass through taxation (can be taxed as an S corporation).
Note: The State of Illinois requires that certain businesses providing professional services form a “professional corporation” or a “professional limited liability company.” Your accountant and attorney can advise whether this is required for your business.
Partnerships: Partnerships can include, but are not limited to, general partnerships, limited partnerships and limited liability partnerships. Partnership legal entities are important for businesses that have multiple owners or investors and can help properly allocate responsibilities, liabilities and obligations among the partners of the business.
Please contact Serna Legal Services at (312) 601-9859 or email@example.com if you’d like to learn more about what legal entity is right for your businesses. Remember that with Serna Legal Services, your business will ¡Celebra! Legal Services!
This content is published by Serna Legal Services, LLC and is available for informational purposes only and is not considered legal advice on any subject matter. By viewing this content, the reader understands there is no attorney-client relationship between the reader and the publisher. The content should not be used as a substitute for legal advice from a licensed professional attorney, and readers are urged to consult their own legal counsel on any specific legal questions concerning a specific situation.