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Among the first selections you must make as a new business owner is determining what sort of business structure you will file as. Because you will probably be operating under the same structure for the rest of the life of the business, knowing which type to file could 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 ideal 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 sort 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 features of sole proprietorships are they are convenient to setup, have few filing requirements, and your business income is taxed alongside 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 is subjected to.

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A partnership is where you and at least one other individual are joint owners in the business. One of the most significant things to be aware of is that you will be individually liable for the actions of your partners and employees. Several of the benefits of starting a partnership include the ability to join resources and knowledge with another. As an example, 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 important benefits over partnerships. The most important of these is limited liability. What limited liability means is that the corporation is a completely independent legal entity from you as an individual. If for instance, the business obtained a loan in order to pay for 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 relatively 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 normal corporation in terms of limited liability. However, for tax purposes, you are treated similarly 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. That being said a limited liability company can incorporate a single owner, whereby case they are taxed as if they were a sole proprietorship. You can also 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 prerequisites. In a limited liability partnership you are protected from the actions of these other parties. Simultaneously 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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