Limited Liability Company (LLC)

A Limited Liability Company, often abbreviated as LLC, comes into existence by submitting articles of organization to the Secretary of State in the respective state. Those who have an ownership stake in an LLC are referred to as members, and these members can encompass a diverse range of entities, including individuals, corporations, other LLCs, and foreign entities. The formation of an LLC can involve one or more members, and there is no upper limit on the number of members it can have.

LLCs are frequently the favored legal structure for certain professionals and landlords. This preference arises from the fact that an LLC is a corporate entity wherein its members (or owners) are shielded from personal liability for the company's debts and obligations. The beauty of an LLC lies in its adaptability, as its owners have the freedom to elect their tax treatment, whether it be as a partnership, S Corporation, or even a sole proprietorship. This flexibility is a testament to the fact that an LLC's nature is primarily legal in character, rather than purely tax-related.

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Church Organization

In the realm of taxation, the term "church" encompasses not only organizations self-identifying as religious institutions but also conventions or associations of multiple churches. This broad definition extends to include temples, mosques, and other places of worship. To qualify as a church for tax purposes, a group must be affiliated with a recognized religion, possess a clear mission statement, and have established itself as a legally distinct entity.

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Sole Proprietor / Individual

A Sole Proprietor is an individual who is the sole owner of an unincorporated business, meaning it is not formally registered as a limited liability company (LLC) or corporation with the state. This category encompasses freelancers, independent contractors, as well as numerous business owners who operate without partners. Household employers also fall within this classification.

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Estate of Deceased Individual

An Estate is a legal entity that comes into existence upon an individual's death. It comprises the personal belongings and/or real property formerly owned by the deceased individual. The Estate holds the responsibility of settling any outstanding debts left by the decedent and then disbursing the remaining assets to the designated beneficiaries.

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Trust

A Trust is a legally established entity governed by state law, constituting a fiduciary relationship in which one party, known as the Trustor, grants another party, referred to as the Trustee, the authority to hold legal ownership of assets, including property, for the benefit of another individual.

The two primary categories of Trusts are Irrevocable and Revocable Trusts:

• Irrevocable Trust - In this type of trust, the Trustor relinquishes control over the trust, rendering it unalterable or irrevocable, and the trust becomes subject to taxation.
• Revocable Trust - A revocable trust, on the other hand, allows alterations or termination during the Trustor's lifetime. Because the trust remains modifiable until the Trustor's death, it is considered part of the Trustor's estate and is consequently subject to taxation.

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Non-Profit Organization

Non-profit organizations encompass a variety of legal structures, such as Corporations, Trusts, LLCs, and Unincorporated Associations, which meet the criteria for obtaining tax-exempt status under IRS Code IRC 501(a). These organizations span a broad spectrum, including private foundations, educational institutions, public charities, veterans' associations, business leagues, homeowners and condominium associations, PTA/PTO or school organizations, among others.

It's important to note that Sole Proprietors, Partnerships, and for-profit entities are ineligible for tax-exempt status.

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Corporation

A Corporation is a formally recognized legal entity brought into existence by the submission of Articles of Incorporation to the state, which bestows upon it a set of legal powers, rights, privileges, and responsibilities. This type of entity can be established by either an individual or a collective group, and it receives a charter from the Secretary of State. Once established, a Corporation assumes a distinct identity and typically enjoys an indefinite existence.

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Partnership

A Partnership is an unincorporated association involving two or more members who engage in a trade or business together, sharing the resulting profits. The partners may consist of individuals, corporations, trusts, estates, or even other partnerships. Each partner contributes either funds, assets, labor, or expertise and anticipates a distribution of both profits and losses within the business. Importantly, the tax liability of the Partnership is passed on to its individual partners.

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Personal Service Corporation

A Personal Service Corporation is created by an individual or a group of individuals through the formal filing of Articles of Incorporation with the Secretary of State in their respective state. Generally, a Personal Service Corporation pertains to an entity engaged in service-related fields such as healthcare, legal practice, engineering, architecture, accounting, actuarial science, the performing arts, or consulting. Within a Personal Service Corporation, a significant majority of its stock ownership is vested in the employees responsible for rendering these services. This type of corporation primarily trades in intellectual assets or expertise, rather than tangible products.

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S-Corporation

An S-Corporation is a corporate entity established through the submission of Articles of Incorporation to the state's Secretary of State. It represents a qualified domestic corporation seeking to circumvent the issue of double taxation, where income is taxed at both the shareholder and corporate levels. In the case of an S Corporation, the income is attributed to the individual shareholders rather than being taxed at the corporate level. This structure tends to be particularly popular among specific professions, including doctors, dentists, and certain consultant categories.

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