California Limited Partnership Agreement

One of the first selections you must make as a new business owner is determining what sort of business framework you will file as. Because you will most likely be operating under the same structure for the rest of the journey of the business, finding out which type to file may be a difficult decision. There are a wide range of varied state filings available for businesses nowadays. Make sure that you choose the file the appropriate one as it can make a huge difference for the financial future of both you and your business. To make your task much easier, below you will learn the major benefits of each variety of state business filing.

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

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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 significant things to be aware of is that you will be individually liable for the actions of your partners and employees. Some of the benefits of starting a partnership include the ability to join resources and knowledge with someone else. As an example, you might know 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 notable 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 applied for a loan in order to pay for a new rig and was unable 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 typical corporation in terms of limited liability. However, for tax purposes, you are treated equally as a partnership. This helps to prevent the problem of double taxation which occurs with standard corporations.

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Limited liability companies are the most flexible form of business structures available. While limited liability companies do share some of the same features, as corporations they are distinct. Like a corporation, they offer limited liability protection. On the other hand a limited liability company can incorporate a single owner, in which case they are taxed as if they were a sole proprietorship. You can also have multiple owners for your limited liability company. One of the other benefits is that they are generally much easier to setup than corporations and have fewer regulatory prerequisites. In a limited liability partnership you are shielded from the actions of these other parties. At the same time 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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