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One of the first choices you should make as a new company is determining what form of business framework you will file as. Because you will probably be operating under the same structure for the rest of the life of the business, understanding which type to file can be a difficult decision. There are a wide range of various state filings available for businesses these days. See to it that you choose the file the best one as it can make a huge difference for the financial future of both you and your business. To make your task less troublesome, below you will uncover the major benefits of each variety of state business filing.

If you do not allocate 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 simple to setup, have few filing requirements, and your business income is taxed along with your personal income. However, this construction 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 at least one other individual are joint owners in the business. Among the most important 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 creating a partnership include the ability to join resources and knowledge with someone else. 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 substantial 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 obtained a loan in order to buy 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 typical corporation in regards to limited liability. However, for tax purposes, you are treated in the same way as a partnership. This helps to stay clear of 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 a number of the same features, as corporations they stand out. Like a corporation, they offer limited liability protection. Nonetheless a limited liability company can consist of a single owner, in which 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 less complicated to setup than corporations and have fewer regulatory requirements. In a limited liability partnership you are safeguarded from the actions of these other parties. Simultaneously 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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