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Among the first decisions you have to make as a new company is determining what kind 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, understanding which type to file can be a difficult decision. There are a wide range of different 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 less complicated, below you will learn the major benefits of each variety 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 perks of sole proprietorships are they are easy to setup, have few filing requirements, and your business income is taxed along with your personal income. However, this system 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 a minimum of another individual are joint owners in the business. Among the most vital 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 establishing a partnership include the ability to enlist resources and knowledge with someone else. As an example, you might know the way 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 notable benefits over partnerships. The most important of these is limited liability. What limited liability means is that the corporation is a completely separate 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 unable to meet the payments, your lender could not pursue you directly for the payment owed. Sub chapter S corporations are a pretty 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 regular corporation in terms of limited liability. However, for tax purposes, you are treated similarly as a partnership. This helps to avoid the problem of double taxation which accompanies standard corporations.

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Limited liability companies are one of 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. That being said a limited liability company can consist of 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. Among the other benefits is that they are generally easier to setup than corporations and have fewer regulatory demands. In a limited liability partnership you are shielded from the actions of these other parties. Additionally 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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