Limited Liability Company (LLC)
A Limited Liability Company (LLC) is a business entity that offers certain limited personal liability on the part of the owner, like a corporation. It also offers the possibility of certain “pass-through” tax benefits, like a partnership. Therefore, an LLC is essentially a cross between a partnership and a corporation.
Limited Partnership (LP)
A Limited Partnership (LP) is composed of general partners and limited partners. An LP allows limited partners to invest in the business and take a share of the profits without becoming personally liable for partnership debts and obligations. A general partner has unlimited liability. An LP pays no entity-level income tax or net worth tax. Instead, each partner is taxed directly upon his or her share of the profits.
A sole proprietorship is the simplest, least regulated, and most common form of business organization. Legally and for tax purposes the individual owner is the business. The sole proprietor has total control of the business. However all of his or her personal and business assets are at risk. Income taxes are reported on the sole proprietor's personal income tax forms, but the business will have to collect and/or pay taxes in the same manner as other businesses. Sole proprietorships are not registered with the Georgia Secretary of State.
A corporation is a business entity that is separate from its owners, the shareholders. It is composed of three different groups: the shareholders, directors, and officers. A corporation has limited liability. Debts incurred by the corporation generally cannot be collected from the officers, directors, or shareholders. For-profit corporations pay tax on earned income and shareholders pay tax on dividends received. Certain smaller corporations may also elect with the Internal Revenue Service to be an S-Corporation. An S-Corporation can help a business avoid double taxation since it is taxed more like a partnership.