Tennessee IRS 2290

Among the first arrangements you have to 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 journey of the business, finding out which type to file can be a challenging decision. There are a wide range of different state filings available for businesses these days. Ensure 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 complicated, below you will learn the major benefits of each type of state business filing.

If you do not define your business with any other type of structure then it will be considered a sole proprietorship by the state. The main advantages of sole proprietorships are they are convenient to setup, have few filing requirements, and your business income is taxed along with your personal income. However, this structure 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 a minimum of one other individual are joint owners in the enterprise. One of the most important things to be aware of is that you will be specifically 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. For instance, you might know tips on how to run a trucking company, but your partner might know the best way to access capital.

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Corporations have a number 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 as an example, the business applied for a loan in order to pay for a new rig and was not capable to meet the payments, your lender could not pursue you personally for the payment owed. Sub chapter S corporations are a reasonably 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 accompanies standard corporations.

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Limited liability companies are extremely flexible form of business structures available. While limited liability companies do share some of the same features, as corporations they stand out. Like a corporation, they offer limited liability protection. That being said a limited liability company can include a single owner, whereby case they are taxed as though they were a sole proprietorship. You can even have multiple owners for your limited liability company. Just one of the other benefits is that they are generally much easier to setup than corporations and have fewer regulatory prerequisites. In a limited liability partnership you are sheltered 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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