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Among the first selections you will need to make as a new entrepreneur is deciding what kind of business system you will file as. Because you will probably be operating under the same structure for the rest of the existence of the business, understanding which type to file could be a challenging decision. There are a wide range of different state filings available for businesses these days. Ensure that you choose the file the ideal one as it can make a huge difference for the financial future of both you and your business. To make your task easier, below you will learn the major benefits of each form of state business filing.

If you do not allocate your business with any other type of structure then it will be considered a sole proprietorship by the state. The main perks of sole proprietorships are they are convenient to setup, have few filing requirements, and your business income is taxed in addition to your personal income. However, this framework is not a separate legal entity from you as an individual, consequently you will be personally liable for any debts your business is subjected to.

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A partnership is where you and at least another individual are joint owners in the business. One of the most vital things to be aware of is that you will be personally liable for the actions of your partners and employees. Some of the benefits of creating a partnership include the ability to enlist resources and knowledge with another. As an example, you might know the way to run a trucking company, but your partner might know how to access capital.

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Corporations have a lot of notable benefits over partnerships. One of the most important of these is limited liability. What limited liability means is that the corporation is a completely distinct legal entity from you as an individual. If for example, the business applied for a loan in order to pay for a new rig and was not capable to meet the payments, your lender could not pursue you personally for the payment owed. Sub chapter S corporations are a fairly new form of business structure that has proved to be popular with many small business owners. A sub chapter S corporation is treated the same as a typical corporation in regards to limited liability. However, for tax purposes, you are treated equally as a partnership. This helps to avoid the problem of double taxation which occurs with standard corporations.

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Limited liability companies are extremely flexible form of business structures available. While limited liability companies do share some of the same features, as corporations they are distinct. Like a corporation, they offer limited liability protection. That being said a limited liability company can include a single owner, in which case they are taxed as though they were a sole proprietorship. You can also have multiple owners for your limited liability company. Just one of the other benefits is that they are generally easier to setup than corporations and have fewer regulatory demands. In a limited liability partnership you are shielded from the actions of these other parties. Additionally the business will be structured under the guidelines of normal partnership. This is generally a better choice than a standard partnership unless the business you are running is very small and has no debt.

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