Washington IRS Form 2290

One of the first decisions you have to make as a new business owner is determining what sort of business structure you will file as. Because you will probably be operating under the same structure for the rest of the journey of the business, understanding which type to file could be a difficult decision. There are a wide range of assorted state filings available for businesses these days. Be 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 simpler, below you will uncover the major benefits of each sort of state business filing.

If you do not assign your business with any other type of structure then it will be considered a sole proprietorship by the state. The main conveniences of sole proprietorships are they are simple to setup, have few filing requirements, and your business income is taxed in addition to your personal income. However, this structure is not a separate legal entity from you as an individual, and so 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 enterprise. 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. A few of the benefits of arranging a partnership include the ability to join resources and knowledge with another person. As an example, you might know the best ways 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. 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 obtained a loan in order to buy a new rig and was not capable to meet the payments, your lender could not pursue you directly for the payment owed. Sub chapter S corporations are a reasonably 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 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 one of the most flexible form of business structures available. While limited liability companies do share a number of the same features, as corporations they are distinct. Like a corporation, they offer limited liability protection. However a limited liability company can consist of a single owner, whereby case they are taxed as though they were a sole proprietorship. You can additionally have multiple owners for your limited liability company. One of the other benefits is that they are generally much simpler to setup than corporations and have fewer regulatory conditions. In a limited liability partnership you are safeguarded from the actions of these other parties. At the same time 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 operating is very small and has no debt.

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