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One of the first choices you must make as a new company is deciding what type of business framework you will file as. Because you will most likely be operating under the same structure for the rest of the existence of the business, determining which type to file can be a challenging decision. There are a wide range of assorted state filings available for businesses these days. Be sure that you choose the file the best 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 uncover the major benefits of each sort of state business filing.

If you do not assign 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 straightforward to setup, have few filing requirements, and your business income is taxed alongside your personal income. However, this system 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 at least one other individual are joint owners in the enterprise. Among the most significant things to be aware of is that you will be individually liable for the actions of your partners and employees. A few of the benefits of setting up a partnership include the ability to enlist resources and knowledge with another. For instance, you might know the best ways to run a trucking company, but your partner might know the way to access capital.

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Corporations have a number of substantial benefits over partnerships. One of 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 buy a new rig and was unfit to meet the payments, your lender could not pursue you individually 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 normal corporation in terms of limited liability. However, for tax purposes, you are treated in the same way as a partnership. This helps to avoid the problem of double taxation which accompanies standard corporations.

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Limited liability companies are extremely 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. Having said that a limited liability company can contain 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 much simpler to setup than corporations and have fewer regulatory prerequisites. In a limited liability partnership you are shielded 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 managing is very small and has no debt.

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