Business in the USA
Sole Proprietorship (jednoosobowa działalność gospodarcza)
is the simplest form of organization, and the least expensive to establish
It is a business owned and controlled by one individual. The owner and worker are the same person (although you can hire employees).
The owner alone receives the profits and bears the losses from the business. For example, if your business cannot pay for its supplies, the suppliers can sue you individually. The business creditors can go against both the business's assets and your personal assets, including your bank account, car or house. There are no partners or shareholders.
This form of organization gives the proprietor (właściciel) the maximum freedom to run the business and respond quickly to day-to-day business needs. The sole proprietor's ability to raise capital generally is limited to the amount he or she can personally secure.
This form of business organization is relatively simple to form and operate. There are no statutory requirements unique to this form of organization. From a regulatory standpoint, the business owner only needs to register the business name as an assumed name (if it does not contain the owner's first and last names), obtain business licenses and tax identification numbers if necessary (when the business will hire employees), and begin operations.
There are two types of partnerships: general partnerships and limited partnerships.
A general partnership (spółka jawna)
is a business that is owned by two or more persons who associate to carry on the business of the partnership for profit. In general partnership all partners share equally in the right, and responsibility, to manage the business, and each partner is responsible for all the debts and obligations of the business.
it can be formed by an oral agreement.
However, it is advisable to have a written agreement, called the Partnership Agreement, signed by all partners addressing major issues relating to the management and operation of the partnership, including:
How much time and/or money the partners will contribute to the business.
How business decisions will be made.
How profits and losses will be shared.
What will happen to the business and to a partner's share of the business if that partner dies, becomes disabled or stops working/contributing to the business.
How long the partnership will exist.
a partnership must obtain business licenses if necessary, obtain federal and state tax identification numbers and unemployment compensation number and will need to register the business name as an assumed name, unless the first and last names of each partner is included in the name of the partnership
A limited partnership (spółka komandytowa)
is a type of partnership which must have at least one general partner and one limited partner. The general partner (komplementariusz) has the right and responsibility to control the limited partnership, and is responsible for debts and obligations of the limited partnership. The limited partners (komandytariusz) share in the partnership's liability only up to the amount of their investment in the limited partnership. The limited partner, in exchange for limited liability, generally does not participate in the day-to-day management and control of the business.
As in the case with general partnerships, a limited partnership will need to obtain business licenses if necessary, obtain federal and state tax identification numbers and may need to register the business name as an assumed name.
In most of the states the limited partnership must file a certificate of limited partnership with the Secretary of State. In addition to the certificate of limited partnership, the limited partnership may also adopt a limited partnership agreement, which governs the details of the partnership and the management arrangement between the general partners and the limited partnership.
Taxes
The partnership itself is not responsible for paying taxes on the income generated by the business. A partnership tax return is filed, but for informational purposes only. Instead, each partner individually pays taxes on his or her share of the business income. The profits and losses "flow down" from the partnership to the individual partners.
Both the general and limited partnerships can elect certain legal rules that give partners in these partnerships greater protection against personal liability. A general partnership that makes this election is called a `limited liability partnership' (LLP); a limited partnership that makes this election - a `limited liability limited partnership' (LLLP). General partnerships that have elected limited liability partnership (LLP) status operate much like general partnerships, but generally partners in limited liability partnerships are not personally liable for the wrongful acts of other partners or for the debts or obligations of the partnership.
Corporation
is a separate legal entity.
It is owned by one or more shareholders/stockholders.
As a separate legal entity, the corporation, not the shareholders. is responsible for the debts and obligations of the business. The shareholders' only risk is their investment in the corporation.
The shareholders elect a board of directors which is responsible for the management and control of the corporation. It must meet at least once a year. Each director on the board is given one vote; usually the vote of a majority of the directors is sufficient to approve a decision of the board. The board of directors elects the officers of the corporation. The officers usually consist of a president, vice president, secretary and treasurer. In many states, one person may hold any or all of these offices. Officers of the corporation are responsible for running the day-to-day business of the corporation.
The corporation, as a separate legal entity, is also a separate taxable entity. The corporation may be taxed under Subchapter C of the Internal Revenue Code (a `C corporation') or Subchapter S of the Code (an `S corporation').
A C corporation must pay taxes on its profits, and the shareholders must pay taxes on the dividends paid to them from the profits. This is why there is said to be a "double taxation" on corporations.
The corporation may elect to be taxed as an S corporation if it meets statutory requirements:
the corporation has only one class of stock;
the corporation has no more than 100 shareholders;
shareholders must be U.S. citizens or residents
shareholders must be physical entities (a person), so corporate shareholders and partnerships are to be excluded.
Generally, an S corporation does not pay taxes on the income generated by the business. Instead, the income or losses are passed through to the individual shareholders and reported on their tax returns. The income or losses are divided among the shareholders based upon the percentage of stock of the corporation that they own.
A corporation is formed by one or more incorporators filing articles of incorporation with the Secretary of State and paying the filing fees. Each incorporator must be a natural person of at least 18 years of age and must sign the articles. Before filing the articles, the individuals who will own the business (the shareholders) must agree on the following:
- The name of the business.
- The total number of shares of stock the corporation can sell or issue (known as "authorized shares").
- The number of shares of stock each of the owners will buy.
- The amount of money or other property each owner will contribute to buy his or her shares of stock.
- The business in which the corporation will engage.
- Who will manage the corporation (i.e., who will be the directors and officers of the corporation).
Most states also recognize non-stock corporations, which are commonly used for nonprofit organizations, community associations, etc. There are no owners in a non-stock corporation, although there may be members.
A limited liability company (LLC) (spółka z o.o.) is a form of business organization that generally combines the limited liability of a corporation with tax status of a partnership.
Like a corporation, a limited liability company has centralized management. An LLC is managed by or under the direction of a board of governors, comprised of one or more individuals. In addition, the LLC must have one or more individuals exercising the functions of chief manager and treasurer.
Liability of the owners of a limited liability company generally is the same as for shareholders of a corporation; that is, the owners are not held personally liable for the debts and obligations of the business. They therefore risk loss only up to the amount of their investment.
An LLC offers its owners a special tax treatment that may prevent what has been called `double taxation' of the owners' income. Limited liabilities companies may choose to be taxed as partnerships or corporations.
The formation of an LLC is accomplished by filing articles of organization with the state and paying the filing fees. Organizers of a LLC must be at least 18 years of age.
Start Up Checklist
Write a Business Plan & Decide upon a Business Structure
Get State License Information & Federal Referrals
Check on Local Licenses & Zoning Information
File Your Business Structure and/or Register Your Business Name
Apply for Licenses & Permits
I. Answer the questions:
In what case a business owner needs to register the business name as an assumed name?
What two types of partnerships are there in the USA?
How many partners does a limited partnership have to have?
Who owns a corporation?
What is a `double taxation'?
When a corporation may be taxed as an S corporation?
What must be filed to form a corporation?
What two business organizations does a limited liability company combine?
What must be filed to form a limited liability company?
In which business structure there are no partners or shareholders?
In which business structure each partner is equally responsible for all the debts and obligations of the business?
Which business structure has a board of governors?
II. Match a business structure to its description:
a sole proprietorship; a general partnership; a limited partnership;
a limited liability partnership; a corporation
has general and limited partners
formed by two or more persons; the owners are all personally liable for any legal actions and debts the company may face
a type of a general partnership in which partners are not personally liable for the wrongful acts of other partners or for the debts of the partnership
has a board of directors
a type of business structure which legally has no separate existence from its owner; all debts of the business are debts of the owner
An assumed name - any name other than the real name of the owner or owners of the business
A dividend - an amount of the profits that a company pays to people who own shares in the company