This document discusses different types of business entities in Illinois, including for-profit entities like C corporations, S corporations, LLCs, LPs, and partnerships. It provides an overview of how these entity types are structured from the startup phase through potential growth involving outside investors or going public. Key points covered include capital contributions, intellectual property ownership, contracts with suppliers and customers, and income tax implications of the different structures.

1. What Business Entity Should I
Use?
William A. Price
Attorney at Law
Growthlaw.com
1-800-630-4780

2. Illinois Entity Types
For-Profit Nonprofit

C Corporation 
Nonprofit Corporation

S Corporation 
Religious Corporation

LLC 
Unincorporated

LP Association

RLLP

Partnership

3. Today's Focus: For Profit Entities

C Corporation

S Corporation

LLC

LP

Partnership

4. From Startup To IPO

Startup: Sole Proprietor

LGOP (Little Group Of Parachutists/People):
Partnership Or Boss/Employees Or Fellow
Students Or Brothers Or Mom & Pop

Initial Organization: Pass-Through Entity at
Lowest Filing Fee, Local

Outside Investors, Private: Still Pass-through

Lots of Owners: Franchises, Investors:
Probably Public (Though P/E Prefer Private)

5. Sole Proprietorship
(Not A Business Entity)

Income Tax: Individual

Filing Fee: None

Personal Property Replacement Tax: None

Liability for Business Expenses And Loss
Causation: All Proprietor Assets

Agency Authority: Proprietor

Management Authority: Proprietor

6. Mom & Pop Business
She He

Owns The Assets 
Does or Runs The

Keeps the Books Business

May or May Not

Gets the customers
Work In The 
Does what he's
Business told!

Inherits Everything

7. Mom & Pop

Share income and other tax liabilities/single
level tax cheaper for joint filers

Separate ownership/liabilities or tenancy by the
entireties to separate household from
business risks

May share liabilities, if she's in business/all
family assets in business

Marital property laws and divorce court, if
disputes among owners

8. Assumed Business Name

Required if any except names of individuals
used as business name

County Clerk Filings & Fees

Newspaper published notices ($$$!)

Annual renewal

New filing/publication with every new
owner/location

9. General Partnership

The default business entity

No filing fees to create

Pass-through tax liability

1.5% Personal Property Replacement Tax

General agency of partners

Management by agreement

10. S Corporation

Requires state filing fees ($150) (Expedited
$100 if online filing, more if walk-in service)

Franchise tax 0.0015 of stated capital
(minimum $25)

Pass-through income tax treatment

Personal property replacement tax 1.5%

Agency authority in President

Management by single class of
Shareholders/elect Board of Directors

11. C Corporation

Requires state filing fees ($150) (Expedited
$100 if online filing, more if walk-in service)

Franchise tax 0.0015 of stated capital
(minimum $25)

Entity level tax on retained earnings, individual
on distributions

Personal property replacement tax 2.5%

Agency authority in President

Management by one or more classes of
Shareholders/elect Board of Directors

12. Limited Liability Company
(My Baby!...)

Filing fee $500

Annual report $250
(Corp. $75)

No franchise tax

Pass-through tax

Agency in Manager or
Members

Management by
Members/Manager
Class(es)

13. Your Entity Is Registered
Are You Battle Ready?

14. Now That I've Got It, How Do I Use
This Thing?

Capital Contributions

Trademark and Business Name

Income Accumulation

Contracts With Suppliers and Customers

Hold Intellectual Property

15. Capital Contributions
• Proprietor Assets: House, Bank Account,
Stocks, Physical Assets, IP
• Friends and Family: IIT $250k, U of C $850k,
here?
• Outside investors (?angels? ?suppliers?
?customers?)
• Private equity (VC, p/e funds for M&A)
• Public Investments

16. What's In A Name?

Entity Name

State Trademark

Federal Trademark

Domain Name(s)

International Trademarks

Policing The Mark: Lawyer Letters, Courts

Policing The Mark: Takedown Notices, ICANN

17. Income Accumulation

C corporations can
have excess
accumulations tax

S corp/passthroughs
might want to buy
saleable assets that
appreciate

EBITDA multiples
are your sale value

18. Contracts With Suppliers and
Customers
Suppliers Customers

Learn the ways of 
Under-promise,
the UCC overperform

Price vs Quality 
Recover your costs

Noncircumvent 
Airborne or Fedex?
agreements 
Get paid upfront,

Get extended pay early, every time
terms

19. Intellectual Property

“Work For Hire” is for employees: Own Your IP

Define your deliverables

Retain rights to your “Expedebits”

Build Proprietary Products And Services

Think About Business/Product Positioning

Register Your Trademarks, Copyrights, and
Patents

20. Questions?

Choice of Entity?

Startup Paperwork?

Capital Formation?

Name and Image?

Contracts?

Buy, Sell, Recap?

21. Thanks For Coming!