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Among the first arrangements you should make as a new entrepreneur is determining what kind of business system you will file as. Because you will most likely be operating under the same structure for the rest of the journey of the business, understanding which type to file can be a difficult decision. There are a wide range of varied state filings available for businesses nowadays. See to it that you choose the file the right one as it can make a huge difference for the financial future of both you and your business. To make your task much easier, below you will uncover the major benefits of each type of state business filing.

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

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A partnership is where you and at least one other individual are joint owners in the establishment. Among the most important things to be familiar with is that you will be specifically liable for the actions of your partners and employees. Several of the benefits of arranging a partnership include the ability to enlist resources and knowledge with another person. For example, you might know how to run a trucking company, but your partner might know how to access capital.

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Corporations have a number of important benefits over partnerships. 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 example, the business applied for a loan in order to buy a new rig and was unfit to meet the payments, your lender could not pursue you in person for the payment owed. Sub chapter S corporations are a relatively new form of business structure that has proved as being popular with many small business owners. A sub chapter S corporation is treated the same as a regular corporation in regards to limited liability. However, for tax purposes, you are treated similarly as a partnership. This helps to avoid the problem of double taxation which accompanies standard corporations.

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Limited liability companies are the most flexible form of business structures available. While limited liability companies do share a couple of the same features, as corporations they are distinct. Like a corporation, they offer limited liability protection. However a limited liability company can incorporate a single owner, whereby case they are taxed as if they were a sole proprietorship. You can even 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 requirements. In a limited liability partnership you are sheltered from the actions of these other parties. Simultaneously the business will be structured under the rules 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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