The organization of business entities can take several forms The first was historically to incorporate and form a corporation owned by stockholders; although this is becoming uncommon, unless one plans on later taking the entity public with a securities offering, in which case the entity must incorporated.
Again, historically, the next choice was a partnership; either a general partnership or a limited partnership. A general partnership is where all partners are liable for all debts of the partnership. This has fallen out of favor because of the liability issues. The next is a limited liability partnership which is composed of two classes; general partners and limited partners. The general partners are liable for all the partnership debts but the limited partners are not.
The favorite entity of today is the limited liability company or LLC. This is because it is a marriage of the best features of a corporation and a partnership. The interest owners of an LLC are not personally liable for the debts of the LLC and neither is any manager of the LLC.
A recent development that I think is going to become the entity of choice is the Series LLC. It offers a way to cost effectively establish subsequent entities without having to go through the formal process of getting a subsequent entity approved by the Secretary of State and one does not have to pay the standard filing fees. I have a page explaining this concept in further detail.
Mouse over the “Practice Areas” at the top and then “Business Entities” to see more detailed descriptions of Corporations, Limited Liability Companies, Family Limited Partnerships and Series LLC’s.