Please explain me like I’m five what is the difference between the different options to incorporate a company in the US. What are the advantages and disadvantages of each option.
Thank you!
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For a layperson a big part of the structures u/Bob_Sconce goes into refers to how the owners/managers of the company are at fault when something goes wrong.
For example if I own a company and the company goes bankrupt, the people I owe money to can sue *me* for the money. That’s obviously a problem for me, so if I run a corporation and I make a ton of money (assuming it’s totally legally and normally) and the company goes bankrupt, than the debtors are kind of screwed, they can’t sue *me* (or the other owners/managers) because *the corporation* owes them money, not me.
The same goes for risk and insurance. Let’s say I have a building design corporation Buildings 101 and there’s a big lawsuit I can’t afford, I can just close my company and then start up Buildings 102 tomorrow.
It’s obviously a bit more nuanced than this, but the core point is shifting liability and risk away from the actual people who run a company to the company itself.
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