Rhode Island IRS 2290

Among the first choices you must make as a new business owner is determining what kind of business system you will file as. Because you will possibly 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 various state filings available for businesses nowadays. Make 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 simpler, below you will learn the major benefits of each type of state business filing.

If you do not assign your business with any other kind of structure then it will be considered a sole proprietorship by the state. The main conveniences of sole proprietorships are they are convenient to setup, have few filing requirements, and your business income is taxed in addition to 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 incurs.

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A partnership is where you and a minimum of one other individual are joint owners in the company. One of the most significant things to be familiar with is that you will be directly liable for the actions of your partners and employees. Some of the benefits of setting up a partnership include the ability to join resources and knowledge with someone else. For example, you might know the way to run a trucking company, but your partner might know the way to access capital.

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Corporations have a lot of considerable benefits over partnerships. 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 for example, the business secured 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 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 standard corporation in regards to limited liability. However, for tax purposes, you are treated equally as a partnership. This helps to avoid the problem of double taxation which occurs with 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 a couple 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 include a single owner, in which 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 requirements. In a limited liability partnership you are shielded from the actions of these other parties. At the same time 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 running is very small and has no debt.

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