Pennsylvania IRS Form 2290

Among the first selections you must make as a new business owner is deciding what type of business structure you will file as. Because you will likely be operating under the same structure for the rest of the existence of the business, finding out which type to file can be a difficult decision. There are a wide range of different state filings available for businesses these days. Ensure 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 simpler, below you will find out 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 perks of sole proprietorships are they are simple to setup, have few filing requirements, and your business income is taxed together with your personal income. However, this system is not a separate legal entity from you as an individual, consequently 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 one other individual are joint owners in the company. One of the most significant things to be aware of is that you will be specifically liable for the actions of your partners and employees. Some of the benefits of arranging a partnership include the ability to enlist resources and knowledge with another person. For instance, you might know tips on how to run a trucking company, but your partner might know how to access capital.

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Corporations have a number of substantial benefits over partnerships. 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 example, the business obtained a loan in order to pay for a new rig and was unable 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 standard corporation in terms of limited liability. However, for tax purposes, you are treated equally 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 stand out. Like a corporation, they offer limited liability protection. On the other hand a limited liability company can incorporate a single owner, whereby 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 prerequisites. In a limited liability partnership you are protected 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 running is very small and has no debt.

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