Michigan Limited Liability Partnership

One of the first arrangements you need to make as a new business owner is determining what kind of business structure you will file as. Because you will likely be operating under the same structure for the rest of the journey of the business, finding out which type to file might 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 correct 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 learn the major benefits of each type of state business filing.

If you do not define your business with any other kind of structure then it will be considered a sole proprietorship by the state. The main features of sole proprietorships are they are convenient to setup, have few filing requirements, and your business income is taxed together with 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 one other individual are joint owners in the company. Among the most important things to be aware of is that you will be individually liable for the actions of your partners and employees. Several of the benefits of arranging a partnership include the ability to enlist resources and knowledge with another. As an example, 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 lot of significant 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 instance, the business took out a loan in order to invest in a new rig and was unable 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 as being 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 some 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, whereby 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 simpler to setup than corporations and have fewer regulatory criteria. In a limited liability partnership you are sheltered from the actions of these other parties. Simultaneously the business will be structured under the guidelines 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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