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Among the first choices you have to make as a new entrepreneur is determining what form of business system you will file as. Because you will most likely be operating under the same structure for the rest of the journey of the business, determining which type to file may be a tough decision. There are a wide range of varied state filings available for businesses nowadays. 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 simpler, below you will find out 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 perks of sole proprietorships are they are simple to setup, have few filing requirements, and your business income is taxed in addition to your personal income. However, this structure is not a separate legal entity from you as an individual, therefore you will be personally liable for any debts your business incurs.

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A partnership is where you and at least another individual are joint owners in the business. Among the most essential things to be familiar with is that you will be specifically liable for the actions of your partners and employees. Several of the benefits of setting up a partnership include the ability to enlist resources and knowledge with another person. For instance, you might know the best ways to run a trucking company, but your partner might know how 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 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 in person for the payment owed. Sub chapter S corporations are a pretty 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 similarly 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 few of the same features, as corporations they are distinct. Like a corporation, they offer limited liability protection. Nonetheless a limited liability company can include a single owner, where case they are taxed as though they were a sole proprietorship. You can also have multiple owners for your limited liability company. Among the other benefits is that they are generally easier to setup than corporations and have fewer regulatory criteria. In a limited liability partnership you are sheltered from the actions of these other parties. Simultaneously 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 managing is very small and has no debt.

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