Michigan Limited Partnership Agreement

Among the first arrangements you need to make as a new business owner is deciding what type of business framework you will file as. Because you will likely be operating under the same structure for the rest of the journey of the business, knowing which type to file could 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 ideal 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 assign your business with any other form of structure then it will be considered a sole proprietorship by the state. The main features 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 structure 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 business. One of the most important things to be familiar with is that you will be specifically liable for the actions of your partners and employees. A few of the benefits of arranging a partnership include the ability to enlist resources and knowledge with another person. For example, you might know the best ways to run a trucking company, but your partner might know the best way to access capital.

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Corporations have a number 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 obtained a loan in order to pay for a new rig and was not capable 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 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 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 a few of the same features, as corporations they are distinct. Like a corporation, they offer limited liability protection. However a limited liability company can contain a single owner, in which case they are taxed as if they were a sole proprietorship. You can additionally have multiple owners for your limited liability company. Just one of the other benefits is that they are generally 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 guidelines 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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