Pennsylvania IRS 2290

One of the first choices you have to make as a new company is deciding what type of business structure you will file as. Because you will probably be operating under the same structure for the rest of the journey of the business, recognizing 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 less complicated, below you will learn the major benefits of each form 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 benefits of sole proprietorships are they are easy 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 a minimum of one other individual are joint owners in the business. Among the most vital things to be familiar with is that you will be specifically liable for the actions of your partners and employees. Several of the benefits of starting a partnership include the ability to join resources and knowledge with another. For instance, you might know how 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 considerable benefits over partnerships. One of 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 took out 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 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 normal corporation in regards to 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 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 incorporate a single owner, where case they are taxed as though they were a sole proprietorship. You can also 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 demands. In a limited liability partnership you are safeguarded from the actions of these other parties. Additionally 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 running is very small and has no debt.

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