The Law Office of
David G. Brisendine, III
If you’re starting a business for the first time, you have important decisions to make. But you’re (probably) not a lawyer—and you might be unfamiliar with all the legal terms and acronyms that get thrown around when you’re taking the steps you need to start a business, from LLCs, S-corps vs. C-corps, to filing a DBA. We are ready to walk you through the process!
Limited Liability Corporation
The Limited Liability Corporation (LLC) is a business structure that is owned and managed by members who are granted limited liability. Unlike a sole proprietorship, an LLC provides a separation between personal assets and the profits of a business. For example, if a sole proprietorship goes under, the owner can also lose their personal finances because they are inextricably linked. If an LLC starts to tank financially, the owner or partners will not be vulnerable to lose their personal finances.
The C corporation is the most common form of incorporation. It is a separate legal entity that is owned by shareholders. Most large, publicly traded companies are C corporations. Owners have limited liability. The owners' assets are protected from the debts and liabilities of the corporation. Shareholders are not held liable for business losses. Transfer of ownership is easy. Shares of stock can be sold. Corporations have perpetual lifetimes. The entity continues to exist beyond the deaths of the owners.
S corporations combine most of the advantages of C corporations with a better tax structure for the owners. S Corporations avoid the double taxation aspect of C corporations. The income of an S corporation is not taxed at the corporate level. Instead, the reported income is passed through to the owners where it is taxed at personal tax rates. Owners have limited liability. Transfer of ownership of shares is easy. S corps have perpetual lifetimes.
A nonprofit organization serves public or mutual benefits and interests. Being a nonprofit does not mean that the organization does not generate profit, but simply that it doesn’t generate revenue for the purpose of harvesting income. They typically serve a scientific, religious, educational, or charitable purpose and, with recognition by the IRS, are tax-exempt.
Doing Business As (DBA)
A company is DBA (or “doing business as”) when they operate under a name that is different from their legal name. Filing for a DBA allows you to do business under a name other than yours, or the name under which your business is legally registered. Using a DBA gives you a more “official” name that you can put on business cards and on your business website. It helps give your business an identity that is separate from your own name.