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One of the first decisions you should make as a new company is figuring out what kind of business framework you will file as. Because you will possibly be operating under the same structure for the rest of the life of the business, finding out which type to file may be a difficult decision. There are a wide range of varied 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 less complicated, below you will learn the major benefits of each form of state business filing.

If you do not appoint your business with any other form of structure then it will be considered a sole proprietorship by the state. The main perks 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 framework is not a separate legal entity from you as an individual, and 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 another individual are joint owners in the establishment. One of the most vital things to be aware of is that you will be directly liable for the actions of your partners and employees. Several of the benefits of creating a partnership include the ability to enlist resources and knowledge with another person. As an 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 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 distinct legal entity from you as an individual. If as an example, the business secured a loan in order to pay for a new rig and was unfit to meet the payments, your lender could not pursue you in person for the payment owed. Sub chapter S corporations are a relatively 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 typical corporation in terms of limited liability. However, for tax purposes, you are treated similarly as a partnership. This helps to prevent the problem of double taxation which occurs with standard corporations.

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Limited liability companies are extremely flexible form of business structures available. While limited liability companies do share a few 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, where case they are taxed as though they were a sole proprietorship. You can even have multiple owners for your limited liability company. Among the other benefits is that they are generally much simpler to setup than corporations and have fewer regulatory demands. In a limited liability partnership you are sheltered from the actions of these other parties. Additionally the business will be structured under the rules of normal partnership. This is generally a better choice than a standard partnership unless the business you are administering is very small and has no debt.

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