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Amount and Timing of Investments

Sole Proprietorship. A sole proprietorship can be started with any amount of investment. The sole proprietor may withdraw funds from the business or put more funds into the business at any time without having to worry about tax consequences or government regulations.

General Partnership. The amount required to invest in a general partnership will be determined by an agreement with the other partners. Investment can be in the form of cash, equipment, mailing lists, or labor and services. The value of the contributed labor and service is usually taxable income to the partner.

Limited Partnership. The amount required to invest in a limited partnership will be determined by an agreement with the other partners. Investment can be in the form of cash, equipment, mailing lists, or labor and services. The value of the contributed labor and service is usually taxable income to the partner. It is important to remember that a limited partner must be careful not to contribute services that involve "managing" the business or the limited partner runs the risk of losing protection from personal liability for the limited partnership's debts and obligations.

Corporation. The amount of total investment is determined by how many shares of stock the corporation is authorized to issue. The corporation can always seek to issue additional shares when the need to raise capital arises. The investment can be in the form of cash, equipment, securities, or even a promise to invest (a stock subscription). Stock subscriptions are often used at the initial stage of forming a corporation.

Limited Liability Company. The amount to be invested will be determined by an agreement with the other members. Investment can be in the form of cash, equipment, mailing lists, or labor and services. The value of the contributed labor and service is usually taxable income to the member.

Next Steps
Contact a qualified business organizations attorney to help you
choose the best formation for your business.
(e.g., Chicago, IL or 60611)

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