What is a Sole Proprietorship?

A very bad idea. Don’t do it. A sole proprietorship is basically when a person such as Joe Dumbass opens a garage doing business as Joe’s Garage. It provides no liability protection and you file a schedule C on your tax return which is historically the most highly audited return. It also provides less tax advantages than other entities. There are no filing requirements at the state level to form a sole proprietorship.

What is a General Partnership?

A Limited Partnership is a business owned by two or more individuals or other business entities where at least one of the partners has limited liability protection. The limited partner’s risk is limited to their financial investment in the business. The downside is the general partners do not have liability protection. The other problem is that the limited partners may not work in the business or participate in the management without losing their limited liability status. Again, there are no filing requirements at the state level to form a general partnership. A general partnership also does not provide liability protection for the general partners. The general partnership also provides less tax advantages than other entities.

What is a Limited Partnership?

At least one party to a divorce must have been domiciled in the State of Colorado for at least 90 days prior to commencing a Dissolution of Marriage of action. Thereafter, at least 90 days must have passed since the court acquired jurisdiction over the respondent via either service of process upon the respondent, the respondent joining as co-petitioner in the petition or the respondent otherwise enters an appearance. Accordingly, the quickest you can get divorced is 90 days from the date that the court acquires jurisdiction over the respondent. The actual timeline will vary greatly depending upon the county, issues involved in your case and whether you go to trial or are able to settle.

What is a Limited Liability Company a/k/a LLC?

A LLC is a company organized and existing under the Colorado Limited Liability Company Act. LLCs are the newest form of business entity. The LLC is versatile and provides both tax and non-tax benefits. It combines the concept of partnership for tax purposes and corporations for liability purposes. The owners which are called “members” of an LLC have liability protection. Liability of members is limited to their personal investment subject only to piercing the “corporate veil.” The members and managers of an LLC may make decisions and take actions without the statutory formalities to which shareholders of a corporation are subject. Overall, LLCs can be an excellent choice for many different types of businesses, holding real estate and for estate planning combined with discounted valuations. A LLC is created by filing Articles of Organization with the state and is typically known as a flow entity for tax purposes.

What is an S-Corporation?

Generally speaking it is not a separate entity but is a C-Corporation that elects a special tax status granted by the IRS. The S-Corporation provides all the liability protection of a C Corporation but does not pay corporate income taxes. The S Corporation is also a flow through entity meaning the individual shareholders report profits and losses on their personal income tax returns.

What is a C-Corporation?

A C-Corporation is a separate legal entity made up of its shareholders and requires more formalities for its operation than any other business structure. A C Corporation is formed by filing Articles of Incorporation at the state level. A C-Corporation provides liability protection to its shareholders. Shareholder liability is generally limited to their personal investment in the corporation. The C-Corporation pays its own taxes at the corporate level and is not a flow-through entity.

What is a Tax ID or Employer Identification Number (EIN)?

In a business that does not have a separate entity structure it is typically the social security number of an individual.

What is a Trust?

A trust is essentially a private contract. It is not a public document and there are no filing requirements at the state level. A trust can be a very useful tool when used in combination with one of the business structures listed above for both asset protection and privacy.