For some people, it is a spark of inspiration for a new product or service that makes them decide to start a small business. For others, it is the desire to turn a hobby into a lucrative profession. And, for some, the idea of being their own boss fuels the decision to establish their own small business. Whatever the reason, when a person in Minnesota decides to start a business, there are a number of business entities they can choose from.
One option is a general partnership. This is a business that has at least two owners with equal rights and responsibilities in the management of the operation. Each owner is also responsible for any debts of the business. The terms of the enterprise will generally be included in a formal partnership agreement.
Another option is limited liability partnerships. These types of partnerships shield the owners personally from the debts of the business, either in part or in full, depending on the situation.
Also, there are corporations. Corporations are owned by at least one shareholder, usually more. The formation of a corporation is laid out in Minnesota law. Shareholders are usually not personally liable for the claims or other liabilities that the corporation might face. There are a variety of kinds of corporations. The difference between them includes the way that the corporation reports expenses and income, and the distribution and taxation of its profits.
In addition, there are limited liability companies. This kind of business entity has a corporation’s limited liability protections while also retaining the tax status of other kinds of business entities, including partnerships or sole proprietorships.
Finally, there are certain highly specialized types of business entities. These include business trusts and cooperative associations, among others. Because they are so complex, those who are interested in forming such an entity may need to seek professional advice.
In the end, because there are so many kinds of business entities, it can be difficult to determine which type is best for you. If you have questions regarding business planning, you may wish to contact an attorney to discuss your concerns.