South Dakota IRS 2290

One of the first selections you need to make as a new entrepreneur is determining what kind of business system you will file as. Because you will likely be operating under the same structure for the rest of the journey of the business, determining which type to file can be a difficult decision. There are a wide range of different state filings available for businesses these days. Make sure that you choose the file the correct one as it can make a huge difference for the financial future of both you and your business. To make your task less troublesome, below you will uncover the major benefits of each form of state business filing.

If you do not mark your business with any other form 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 together with your personal income. However, this framework is not a separate legal entity from you as an individual, therefore you will be personally liable for any debts your business is subjected to.

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A partnership is where you and a minimum of one other individual are joint owners in the company. Among the most significant things to be familiar with is that you will be individually liable for the actions of your partners and employees. Some of the benefits of setting up a partnership include the ability to join resources and knowledge with another person. For example, you might know tips on how to run a trucking company, but your partner might know the way to access capital.

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Corporations have a number of considerable benefits over partnerships. One of the most important of these is limited liability. What limited liability means is that the corporation is a completely independent legal entity from you as an individual. If for example, the business secured a loan in order to invest in a new rig and was unable to meet the payments, your lender could not pursue you individually for the payment owed. Sub chapter S corporations are a reasonably 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 terms of limited liability. However, for tax purposes, you are treated equally as a partnership. This helps to stay clear of 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 a few of the same features, as corporations they stand out. Like a corporation, they offer limited liability protection. That being said a limited liability company can include a single owner, whereby case they are taxed as if 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 much simpler to setup than corporations and have fewer regulatory criteria. In a limited liability partnership you are sheltered from the actions of these other parties. Simultaneously the business will be structured under the regulations of normal partnership. This is generally a better choice than a standard partnership unless the business you are administering is very small and has no debt.

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