Types of business entities in the United States

First of all, we need to know that in the United States there are no federal laws which rules the different types of business entities, so to start a business we need to follow the rules stablished by the States. However, that types of business entities are mostly the same across the Union.

Once the business has been incorporated, it can develop its businesses in more than one State and has its head office outside the incorporation State. Nonetheless, the company must comply with the rules of its State of incorporation.

In the United States exists, essentially, three types of business entities:

  1. Sole propietorship: the propietor and his business are the same legal entity, consequently the entrepeneur  is personally responsible of all obligations.
  2. Partnership: when two or more individuals are propietors of the business. The responsability for the obligators may be limited or unlimited. This type is divided into General Partnership and Limited Partnership. The difference between them is the level of responsability of the partners.
  3. Corporation: is an independent legal entity from his shareholders. Divided into C Corporation and S Corporation, the difference between them is the tax treatment.

On the other hand, we can see another three separate types of business entities:

  • Limited Liability Company (LLC): is a comparatively new type of business entity stablished in most of the States since the 90’s. They are very flexible businesses which combines the benefits of a C Corporation with the tax benefits of a General Partnership.
  • Joint Venture: legal entity under the agreement of two or more partners, where the risks and profits are shared among them. Does not need to be a separate legal entity from the partners.
  • Branch: it has no legal entity but is an extension of an alien company and depends completely from the mother company, which takes responsability for all his obligations.

Source: Guía país. Estados Unidos 2013. ICEX.

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Canarifornia Eatery: an example of adaptation

Few months ago I read in a regional newspaper the history of Canarifornia Eatery, a small business which produces and sells canarian mojo in San Diego (USA).

Since the beginning what strikes me the most is that the mojo is being very well accepted by the customers, as the propietor says. Even the customers have started to make experiments like, for example, using the mojo with pasta.

The canarian mojo is a very typical product from the Canary Islands and its taste could be strong for many ones. However, Canarifornia Eatery have known how to adapt the sauce to the local products and flavors which the customers already know, achieving a faster market acceptation.

They produce three varieties of their mojo sauce: green, red and “yellow”. The last one is the most clearly adaptation to the local market of the typical canarian mojo sauce.

Generally, in the Canaries, the green mojo is made with cilantro and green bell peppers, adopting its green color. The red mojo is made with spanish paprika and red bell peppers, which give it the red or strong orange color. However, the caracteristics of the californian market with its great mexican influence has made to Canarifornia impossible not to add jalapeños and cayenne pepper to green and red mojo  sauce respectively.

On the other side, we can see in the image above, Canarifornia also produces yellow mojo, unknown in the Canaries, made with yellow bell peppers, mango and habanero peppers. By its spicy ingredients, this variety seems to be focused to latin customers.

Canarifornia Eatery is a good example of how to adapt a foreign product to a local market without big investments and using local products and flavours already known by the potential consumers.

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