Michigan Corporation Filing

One of the first decisions you need to make as a new company is determining what kind of business structure you will file as. Because you will likely be operating under the same structure for the rest of the existence of the business, finding out which type to file could be a complicated decision. There are a wide range of various state filings available for businesses nowadays. Make sure 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 less complicated, below you will uncover the major benefits of each form of state business filing.

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

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A partnership is where you and at least one other individual are joint owners in the business. One of the most essential things to be familiar with is that you will be directly liable for the actions of your partners and employees. Several of the benefits of starting a partnership include the ability to join resources and knowledge with another. For instance, you might know the best ways to run a trucking company, but your partner might know the way to access capital.

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Corporations have a lot of significant benefits over partnerships. One of the most important of these is limited liability. What limited liability means is that the corporation is a completely separate legal entity from you as an individual. If for instance, the business secured 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 terms of limited liability. However, for tax purposes, you are treated in the same way as a partnership. This helps to prevent 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 several 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 consist of a single owner, where case they are taxed as if they were a sole proprietorship. You can also have multiple owners for your limited liability company. Among the other benefits is that they are generally less complicated to setup than corporations and have fewer regulatory prerequisites. In a limited liability partnership you are protected from the actions of these other parties. At the same time 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 operating is very small and has no debt.

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