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Among the first choices you should make as a new business owner is deciding what form of business framework you will file as. Because you will most likely be operating under the same structure for the rest of the existence of the business, knowing which type to file may be a complicated decision. There are a wide range of varied state filings available for businesses nowadays. Make sure that you choose the file the right 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 variety of state business filing.

If you do not designate your business with any other type 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 along with your personal income. However, this structure is not a separate legal entity from you as an individual, so you will be personally liable for any debts your business acquires.

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A partnership is where you and at least another individual are joint owners in the business. Among the most significant things to be aware of is that you will be directly liable for the actions of your partners and employees. A few of the benefits of arranging a partnership include the ability to enlist resources and knowledge with another. As an example, you might know how to run a trucking company, but your partner might know the way to access capital.

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Corporations have a number 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 separate legal entity from you as an individual. If for example, the business applied for a loan in order to buy a new rig and was unfit to meet the payments, your lender could not pursue you directly for the payment owed. Sub chapter S corporations are a reasonably 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 standard corporation in terms of limited liability. However, for tax purposes, you are treated in the same way 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 couple of the same features, as corporations they are distinct. Like a corporation, they offer limited liability protection. Having said that a limited liability company can consist of a single owner, where case they are taxed as if they were a sole proprietorship. You can even have multiple owners for your limited liability company. One of 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. Simultaneously the business will be structured under the rules 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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