Are you planning to start a trucking business or want to reevaluate your current business organization? If so, it is critical to know and understand different business structures. It is important to do your research about the appropriate corporation filing for your business. Look at the tax structures advantageous to your revenue and how best you can protect yourself from liability. Each business structure, from sole proprietorships, S-corps to Limited Liability Companies offer different tax structures, and they are unique. Therefore, it is essential to weigh your company’s needs and select wisely. You can also contact an attorney or business service provider to choose the best option for your business. Read on as Global Multi Services explain the business structures you can choose from.
A sole proprietorship is one of the easiest and most affordable business structures to set up. It is a good option for individuals that want to work alone. In a sole proprietorship, the owner’s business income and expenses are included in their personal income tax. However, the structure offers no tax benefits and liability protection. You also pay both employer and employee’s employment tax.
Generally, partnerships are a business structure with more than one owner. In this type of structure, multiple owners invest in the business and share its profits and losses. They also share the lawsuit debts depending on the type of partnership they have set in motion.
S-CORPORATION FILING
S-corporation is more beneficial to small businesses because of its tax benefits and personal asset protection. The company's income and losses are passed through to shareholders and included on their tax returns. These help them avoid double taxation, which means more money for them. They are also subjected to many corporation rules. These include filing an article of corporations, holding shareholder's meetings, and many more.
C-CORPORATION FILING
C-corporation is one of the most expensive and complex business structures to set up. It is an independent legal entity that deals with more regulations and requirements. They are often formed under the laws of each state and offer liability protection to its shareholders. That means the shareholders personal asset is not at risk. The corporation can also retain some of its profits without the shareholders paying tax on them. In C-corporation, the company is subjected to double taxation. This means the business income is taxed as a separate entity. Earnings distributed to the shareholders in the form of dividends are also taxed on their personal income tax.
LIMITED LIABILITY COMPANY
Limited liability companies are one of the most popular business structures among entrepreneurs in the world today. It is easy to manage and follow lesser rules when compared to a corporation. Setting up a limited liability company requires filing articles of organization with the secretary of state in your base stare. It provides entrepreneurs with liability protection without double taxation. That means the business profits and losses pass through the owner and are included in their personal income tax.
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