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Among the first decisions you must make as a new company is determining what type of business structure you will file as. Because you will most likely be operating under the same structure for the rest of the life of the business, recognizing which type to file can be a challenging decision. There are a wide range of varied state filings available for businesses these days. Ensure 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 easier, below you will learn the major benefits of each sort of state business filing.

If you do not appoint your business with any other form of structure then it will be considered a sole proprietorship by the state. The main benefits of sole proprietorships are they are straightforward to setup, have few filing requirements, and your business income is taxed in addition to your personal income. However, this framework 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 company. One of the most vital things to be familiar with is that you will be individually 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 someone else. For instance, you might know the way 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 purchase a new rig and was unable to meet the payments, your lender could not pursue you in person 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 standard corporation in regards to 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 several of the same features, as corporations they are distinct. Like a corporation, they offer limited liability protection. Nonetheless a limited liability company can consist of 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. One of the other benefits is that they are generally much easier to setup than corporations and have fewer regulatory requirements. 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 operating is very small and has no debt.

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