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Business Entities in the US

Business Entities around the World

There are many types of business entities in the United States for two reasons. First, there is no federal registration. Each state authorizes legal entities by statute and common law.

Second, a complex tax code creates a level of variation for most types of legal entities. For example “C Corporations” and “S Corporations” are both corporations under state law, but each takes advantage of different subchapters of the tax code.

These tables summarize the various business entities and key terms for each.

Business Entity Types

There are four broad categories of business or legal entities in the United States. This table shows terms generally used for owners and management of each type of legal entity.

Types of Business Entities in the United States

Entity Owners Management
Corporation Shareholders
Stockholders
Officers
Directors
Limited Liability Company Members Managers
Members
Partnership Partners Partners
Sole Proprietorship Proprietor Proprietor

Details for corporations, LLCs, and partnerships are available below.

Types of Corporations

The corporate form is flexible. These are five of the more common type of corporations from a tax code perspective.

Types of Corporations in the United States

Type of Corporation Liability Protection Tax Status
C Corporation Entity Taxable
S Corporation Entity Pass through
Non-Profit Entity N/A
Benefit Corporation Entity Taxable
Professional Corporation Limited Taxable

Non-Profits are typically organized under 501(c)(3) of the Internal Revenue Code for tax purposes. There are many other types of non-profit tax registrations.

The Professional Corporation designation is not a product of the tax code. It is a create of state law. Not all states authorize Professional Corporations.

Types of Limited Liability Companies

Limited liability companies are products of state law. Most states have adopted a form of the Uniform Limited Liability Company Act.

Types of LLCs in the United States

Type of LLC Liability Protection Tax Status Owner-Manager Separation
Member Managed Entity Pass through Combined
Manager Managed Entity Pass through Separate
Professional LLC Limited Pass through Varies

The LLC is also a flexible legal form. Smaller LLCs often use the Member Managed form where the members also run the business as officers. Manager Managed LLCs separate oversight by owners (members) and operations (managers).

LLCs can also opt to be taxed like a corporation with entity level taxation, but this is not typical.

Many LLCs adoption the nomenclature of corporations, such as a Board of Directors and officers.

Some states authorize a master LLC form called a Series LLCs.

Types of Partnership

Generally (pun intended), partnerships are unincorporated business entities. There are several forms of partnership governed both by common law and statue.

Types of Partnerships in the United States

Type of Partnership Abbreviation Liability
General Partnership GP All Partners
Limited Partnership LP Only General Partner
Limited Liability Partnership LLP Limited, like LLC
Limited Liability Limited Partnership LLLP General Partner has limited liability

The LLLP (or “triple LP”) is much less common than other forms of partnership. Partnerships benefit from pass through tax status.

Conclusion

For a detailed discussion of business entities see our analysis of 30 years of data about business entity incorporation.

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