Entity formation refers to the process of legally establishing a business or organization as a separate legal entity distinct from its owners or members.

Common types include: Sole Proprietorship Partnership (General Partnership, Limited Partnership) Limited Liability Company (LLC) Corporation (C-Corporation, S-Corporation) Non-profit Organization

A sole proprietorship is a business owned and operated by a single individual. The owner is personally liable for all debts and obligations of the business.

A partnership is a business owned by two or more individuals who share profits, losses, and responsibilities. Types include: General Partnership (where partners share equal liability) Limited Partnership (with one or more general partners and limited partners with limited liability)

An LLC is a hybrid legal structure that provides limited liability to its owners (members) while allowing flexibility in management and tax treatment.

A corporation is a legal entity separate from its owners (shareholders) with limited liability for its shareholders. It can be structured as a C-Corporation (standard) or an S-Corporation (with pass-through taxation).

The choice depends on factors such as liability protection, tax implications, management structure, and compliance requirements. Consulting with a legal or tax advisor is advisable.

Steps typically include: Choosing a business name Registering the business with the appropriate state or local authority Drafting and filing formation documents (Articles of Incorporation, Certificate of Formation, etc.) Obtaining necessary licenses and permits Complying with tax and regulatory requirements

Advantages include limited liability protection for members, pass-through taxation (avoiding double taxation), flexibility in management structure, and fewer formalities compared to corporations.

Nonprofit formation involves specific steps including: Drafting a mission statement Incorporating as a nonprofit corporation Obtaining tax-exempt status from the IRS (501(c)(3) status for charitable organizations) Complying with state and federal regulations governing nonprofits.