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One of the first decisions you have to make as a new company is figuring out what kind of business framework you will file as. Because you will possibly be operating under the same structure for the rest of the journey of the business, finding out which type to file can be a challenging decision. There are a wide range of assorted 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 less complicated, below you will find out the major benefits of each type of state business filing.

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

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A partnership is where you and at least another individual are joint owners in the business. One of the most significant things to be aware of is that you will be directly liable for the actions of your partners and employees. Some of the benefits of establishing a partnership include the ability to enlist resources and knowledge with another person. For 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 number of considerable benefits over partnerships. 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 took out a loan in order to buy 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 regular 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 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 number 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 contain a single owner, in which 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 conditions. In a limited liability partnership you are sheltered from the actions of these other parties. Simultaneously the business will be structured under the standards 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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