Now that you have your business type established, how should you operate it?  Various entities have different requirements.  Below is a brief explanation.

SOLE PROPRIETORSHIP

• Controlled by one person
• All liability rests on the owner

PARTNERSHIP — GENERAL

• General partners have equal management rights and control, if not otherwise specified in a partnership agreement
• Responsibilities and control can be defined in a written partnership agreement

PARTNERSHIP — LIMITED

• Management and control of the business handled by the general partners
• Partners’ liabilities limited to their investment

 CORPORATION — C AND S

• Bylaws (operating rules) created to establish and explain the rules governing the organization
• Shareholders have sole authority to approve articles of incorporation, mergers and dissolution of the company and elect the directors
• Directors are responsible for major decisions, including selection of company officers
• Employees, including owners, must be paid reasonable compensation
• Hold annual meetings

 LIMITED LIABILITY COMPANY (LLC)

• Single-owner LLCs operate like sole proprietorships