The rights of business owners may vary drastically based upon the nature of the business entity itself. Business entities can take various forms – corporation, partnership or limited liability company being the most common. There are subsets of each of these forms, such as limited partnerships and professional corporations. Each type of business will have the rules of governance and rights of ownership established by either a written document, such as a shareholders agreement or operating agreement, or alternatively, by a statutory framework established by the state in which the business is registered.
As a business owner, it is important to understand that the rights of a partner vary drastically from those of a corporate shareholder, or those of a member of a LLC. Likewise, the potential remedies available to owners of each of these business forms vary.
Before choosing which type of entity is best for your business’ needs, it is a good idea to have a basic understanding of how that choice may affect the rights of ownership and management in the event that a governance dispute later arises.