ABA Family Legal Guide

Forming and Operating a Small Business

Types of Business Organizations

Corporations

What actions can a corporation take under the law?

A corporation has the right to own and dispose of property in its own name and to sue and be sued in its own name. This makes things a lot easier for everyone doing business with the company, since it does not require action by all the shareholders.

A limited liability company, like a corporation, may own property and sue and be sued in its own name. A proprietorship, on the other hand, does not have separate entity status, but this does not cause any practical problems because there is only one person, the sole proprietor, in whose name title to property belonging to the proprietorship is taken. Moreover, suits by and against a proprietorship must be in the name of the sole proprietor, even if the proprietorship operates under a name different from that of the proprietor.