You would think the answer to this is obvious, and sometimes it is. The short answer: A partnership consists of two or more individuals who operate as co-owners of a for-profit business. The partnership exists whether or not the participants intend to form an official partnership (a de facto partnership). The longer explanation: Please contact [...]
Short answer: yes, but now it depends on even more than it used to. And even though I advise in the tax area, determining what entity is best for your enterprise now depends on a wide variety of factors that are specific to your entire economic situation and not just the business.
Call me! Seriously, the differences are numerous; here are a couple to get you started: LLCs have a more flexible tax structure, have fewer housekeeping requirements, but aren’t ideal for larger companies, especially those seeking outside investors. Corporations are, well, just read that last sentence but the opposite.
A C Corporation is a Corporation that hasn’t elected under the Internal Revenue Code to be taxed as an S Corporation. The best way to describe it is to check out what an S Corporation is. Trust me; it’s not circular.
You could. But you’d want a good reason to. For example, if you live there and are planning on running your business from there, makes sense. If you’re running your business in California, then incorporating in Nevada may be due to more nefarious reasons. Some attorneys like to organize their clients in Nevada because reaching an LLC’s assets through its members in Nevada is not permitted. Still, if your business is based in California, you’ll still need to register the corporation or LLC in California (too) and pay taxes in California.
Yes. There are some very case-specific nuances, especially when you get down to single-member LLCs, but unlikely anything that is going to effect you generally. Don’t obsess over this one unless you have plans to not pay taxes, for example.
First things first: the question really is whether an entity is going to do you any good at all. From a liability perspective, keep in mind that anything you do is your personal problem; putting your medical practice into a corporation won’t shield you from your own malpractice. But it could, for example, shield you from your employee’s malpractice, or your file clerk’s sexual harassment claim against a fellow doctor. And it may also shield you from your partner’s malpractice. So there are upsides. Some states, like California (where I practice), restrict the use of certain entities by professionals. The term “professional” itself has some grey area. Typically, professionals required to have a certain education, training, and experience aren’t permitted to use an LLC for their business (in California). So lawyers, doctors, etc. will generally use a corporation, though certain professions, like lawyers, have other specific partnership entities available to them. Others, like real estate appraisers, are still permitted to use an LLC. There may also be tax reasons, as a professional, to put your business into an entity. There’s much to consider.
You probably didn’t think to ask this until you saw it was a question. Answer: No. S Corporations are restricted with respect to their ownership, one of the key factors why they can’t always be used. For example, no more than 100 shareholders can own shares in an S Corp, no shareholder can be a non-resident alien, and unless certain filings and compliance rules are met, they generally can’t be owned by other entities, only individuals.
I find that this is much more critical than some people think. A tax ID number is your corporation or LLC’s separate tax identity. Whether it’s opening a bank account, setting up payroll, or filing a tax return, this number is THE number for all purposes. Here’s how you can get one (good luck to you) or here's how you can get one (answered by me). Important note: you need some kind of tax identification to get a Tax ID Number. Usually that original identification comes in the form of an individual's Social Security Number (usually the person forming the entity if it's a small business). But foreign owners have a more difficult time doing this since they don't usually have Social Security Numbers; in that case, they need to apply for an individual tax ID number, and then use that number to get the Tax ID Number for the corporation or LLC.