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Among the first choices you must make as a new entrepreneur is determining what variety of business system you will file as. Because you will likely be operating under the same structure for the rest of the existence of the business, understanding which type to file may be a complicated decision. There are a wide range of varied state filings available for businesses nowadays. Be 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 simpler, below you will find out the major benefits of each variety of state business filing.

If you do not designate your business with any other kind 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 system is not a separate legal entity from you as an individual, therefore you will be personally liable for any debts your business acquires.

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A partnership is where you and a minimum of another individual are joint owners in the establishment. Among the most important things to be familiar with is that you will be personally liable for the actions of your partners and employees. Several of the benefits of arranging a partnership include the ability to join resources and knowledge with another. As an example, you might know the best ways 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 significant 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 as an example, the business took out a loan in order to buy a new rig and was not capable to meet the payments, your lender could not pursue you in person 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 typical corporation in regards to limited liability. However, for tax purposes, you are treated equally as a partnership. This helps to stay clear of the problem of double taxation which occurs with 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 are distinct. Like a corporation, they offer limited liability protection. However a limited liability company can contain 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 less complicated to setup than corporations and have fewer regulatory demands. In a limited liability partnership you are safeguarded from the actions of these other parties. At the same time the business will be structured under the guidelines of normal partnership. This is generally a better choice than a standard partnership unless the business you are administering is very small and has no debt.

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