Business Law FAQ's
What type of business entities are available to Minnesota entrepreneurs?
The most common types of business entities chosen by entrepreneurs include not only the LLC and the partnership, but also the sole proprietorship, the limited partnership (or LP), and of course, the corporation. Each type is treated differently under state and federal tax law. Kevin K. Shoeberg, a knowledgeable business formation attorney, can assist you in selecting the right business model for your needs when it comes to taxes, liability, and other issues.
What factors determine the type of business entity I choose?
The type of business entity you select largely depends on your goals and needs as an entrepreneur. New business owners will often choose a business entity based on what degree of liability if offers, along with the kind of taxes it will be susceptible to. For example, under a partnership, small business owners remain personally liable for any debt associated with their business. While under a limited liability corporation, or LLC, they do not.
How does an “S Corporation” differ from a “C Corporation” in the State of Minnesota?
Whether a corporation is classified as an S Corporation or a C Corporation depends on what portion of the Internal Revenue Code those forming it decides it is to be treated under. Subchapter S of the code dictates that the shareholders of a corporation, rather than the corporation itself, can be taxed on its profits. Under Subchapter C, however, the corporation itself is taxed, but the dividends earned by shareholders from the tax-adjusted profits can then be taxed again.