A business entity is the type of formation under which a company chooses to register. This entity affects liability, tax requirements, insurance and ownership control. In the state of Virginia, there are six different types of business formations: sole proprietorship, general partnership, limited partnership, corporation, business trust, and limited liability company. Each business entity has regulations that must be followed.
Sole proprietorship is an unincorporated business, owned and operated by one person, who has full profitability and liability. A general partnership is an association, owner and operated by two or more people, who equally share profits and liability. A limited partnership is an association, owned and operated by one general partner and one or more limited partners. The general partner maintains control and liability; the limited partner has limited control, no liability, and shares profitability. A corporation is a business entity that is incorporated as a separate legal entity apart from its owners.
In Virginia, a corporation is either stock or non-stock. A stock corporation sells shares to gain capital and earns profit. A non-stock corporation does not issue stock and operates as not-for-profit. A business trust is unincorporated, operated by a trust, and managed by one or more trustees. A business trust is a separate legal entity and its managers have limited liability. Lastly, a limited liability company is an unincorporated association, managed by members who have limited personal liability (Commonwealth, 2005).
To form a business entity in Virginia, a statement of registration must be completed and sent to the State Corporation Commission at P.O. Box 1197, Richmond, Virginia 23218. Information on all Virginia's business regulations can be found at http://legis.state.va.us/ (Commonwealth, 2005).
To form a corporation in Virginia, a business must complete the Articles of Incorporation and file with the State Corporation Commission. All corporations in...