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Among the first arrangements you need to make as a new company is figuring out what form of business framework you will file as. Because you will probably be operating under the same structure for the rest of the life of the business, knowing which type to file could be a difficult decision. There are a wide range of assorted state filings available for businesses nowadays. Make 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 easier, below you will uncover the major benefits of each form 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 advantages of sole proprietorships are they are convenient 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, 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 business. One of the most important things to be familiar with is that you will be individually liable for the actions of your partners and employees. Some of the benefits of setting up a partnership include the ability to join resources and knowledge with another person. For instance, 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 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 secured a loan in order to invest in a new rig and was not capable to meet the payments, your lender could not pursue you individually 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 normal corporation in terms of limited liability. However, for tax purposes, you are treated equally 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 some 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, in which 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 less complicated to setup than corporations and have fewer regulatory requirements. 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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