Corporate laws in the United States

With the GDP of approximately $20.513 trillion, the United States is the world’s 

highest economy today.1 The reason for which is high average incomes, capital 

investments, highly technical industries, less unemployment, etc. Which definitely 

makes it a better place for a business start-up. 

In the United States, corporate laws are differentiated in different levels as 

federal, state and local levels. Every state has their own local laws. The standards 

of which are described in securities act of 1933 and securities and exchange act 

1934.2 Henceforth, federal laws possess the minimum standard in company 

shares, trade, etc. 

Corporation are allowed to incorporate in whichever state it like and is suitable 

for them, it’s also open for different branches no matter where the headquarter 

are located. Further talking about entities the United States has many different 

forms of business entities but there are mainly four types. 

1. Sole Proprietorship 

2. Partnership 

3. Limited Liability Company 

4. Business Corporation 

As the word itself suggests that Sole Proprietorship runs by a single individual, 

he is the only one who is managing the business assets, liabilities and profits. 

Nearly 72% of all the US business is running through this. 3Among 4 main entities, 

it is the cheapest forms of start up for business there is limited personal liabilities 

for loss Incurred by business or of any legal actions. Profit earned are taxed as 

personal income. 

2. Partnership 

1 GDP of USA 2 Acts 3 Sole proprietorship 

A partnership is comprised of two or more person to run a business. The word 

“persons” include individuals or a group of individuals, comprises or corporations. 

The partners share their profits and controls business operations. Here the 

partners are jointly or separately liable for debts incurred. As the federal system 

states govern the different laws but most of the states of US have adopted Uniform 

partnership Act for the partnership to exist following factors are determined. 

– Intensions of parties 

– Joint administration 

– Joint control over the business 

– Capital investment of the partner 

– Common ownership of the property 

Partnership is not a taxable entity. The income is taxable to partners according to 

the number of shares they hold from the company. 

(Source – U.S code 26.USc international revenue code) 

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