Sole Proprietorship – In a Sole Proprietorship the individual business owner is personally responsible for all debts and liabilities incurred as a result of business operations.  The sole proprietor business owner also retains all of the net profits and reports the business income and expenses on his or her individual tax return.  If the business will be operated under a name that is different from it’s owner then a fictitious business name registration will be required.


General Partnership – A General Partnership is formed when two or more business owners begin operations.  Each owner is individually liable for all the debts and obligations incurred by the business.  General partners should have a written partnership agreement that describes what each partner is expected to do, what each will be paid for his or her efforts as an owner and how the business can be sold.  Although not required, a general partnership can be registered with the California Secretary of State.


Limited Partnership – A Limited Partnership is formed to allow one or more General Partners to manage a partnership with one or more Limited Partners to participate economically but without management rights.  Limited Partners are only liable for the debts and obligations of the business up to the amount of their personal financial contributions of funds toward the operating expenses of the business.  Limited Partnerships must be registered with the California Secretary of State and there are other legal requirements that must be observed.


Limited Liability Partnership (LLP) – A Limited Liability Partnership is formed by two or more individuals who practice in certain licensed professions, such as attorneys, physicians, dentists, accountants, architects and land surveyors.   In addition to registering with the California Secretary of State, these types of businesses must also comply with licensing and insurance requirements specific to the particular profession the partnership will engage in.


Corporation – A Corporation exists independently of its owners (although the owners can also manage and operate the business) and it is taxed separately.  A corporate structure can also provide the owners immunity from liability for the debts and obligations of the business in certain circumstances.  Creation of a Corporation requires registration with the California Secretary of State.   As of January 1, 2012, two new types of Corporations can be registered – a “flexible purpose corporation” and a “benefit corporation”.


Professional Corporation – similar to a Limited Liability Partnership, a Professional Corporation is formed by individuals who practice in certain licensed professions. The rules governing the creation of these two types of professional entities are somewhat different.


Limited Liability Company (LLC) – As the name implies, a Limited Liability Company is a type of business entity that provides its owners with decreased liability for the debts and obligations of the business.   It also allows its owners greater flexibility than a Corporation.  Like a Corporation, a Limited Liability Company must be registered with the Secretary of State.


Joint Ventures – Two different business entities may choose to join forces to accomplish a common project.  These arrangements are called Joint Ventures and resemble a General Partnership in that both entities are liable for all of the debts and obligations of the Joint Venture project.  Although no registration is required to form a Joint Venture, documentation of the roles and expectations of all participating business entities is key.


Non-Profit Organization – Non-Profit organizations can either be Charitable Corporations or Unincorporated Associations, but the vast majority of such organizations chose to incorporate.  Additionally, depending on the charitable goals the organization wishes to pursue, other registration may be required.