Tennessee IRS Form 2290

One of the first choices you must make as a new entrepreneur is deciding what sort 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, knowing which type to file might be a complicated decision. There are a wide range of assorted state filings available for businesses nowadays. Be sure 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 easier, below you will uncover the major benefits of each type of state business filing.

If you do not designate your business with any other form of structure then it will be considered a sole proprietorship by the state. The main conveniences of sole proprietorships are they are easy 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, so 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 enterprise. Among the most important 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 establishing a partnership include the ability to join resources and knowledge with another. For instance, you might know how to run a trucking company, but your partner might know the best way to access capital.

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Corporations have a lot of significant benefits over partnerships. 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 instance, the business secured a loan in order to purchase a new rig and was not capable 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 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 similarly as a partnership. This helps to stay clear of 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 several of the same features, as corporations they stand out. Like a corporation, they offer limited liability protection. However a limited liability company can contain a single owner, where case they are taxed as if they were a sole proprietorship. You can additionally have multiple owners for your limited liability company. Among the other benefits is that they are generally much simpler to setup than corporations and have fewer regulatory demands. In a limited liability partnership you are safeguarded 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 administering is very small and has no debt.

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