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Among the first choices you have to make as a new business owner is deciding what sort of business system 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 complicated decision. There are a wide range of different state filings available for businesses nowadays. Be 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 simpler, below you will learn the major benefits of each variety of state business filing.

If you do not mark your business with any other form of structure then it will be considered a sole proprietorship by the state. The main advantages of sole proprietorships are they are simple to setup, have few filing requirements, and your business income is taxed alongside 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 acquires.

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A partnership is where you and at least another individual are joint owners in the company. One of the most significant things to be familiar with is that you will be personally 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 someone else. For example, you might know the best ways to run a trucking company, but your partner might know how to access capital.

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Corporations have a number of notable 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 example, the business secured 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 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 regular 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. That being said a limited liability company can contain a single owner, whereby case they are taxed as if 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 much easier to setup than corporations and have fewer regulatory criteria. 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 running is very small and has no debt.

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