You will be required to register your business. We can form your company today. There are several business structures to choose from. The type of business structure you choose is important for tax purposes. Read up on the differences and chose the one that is best for you. If you are not sure just ask us and we can help you decide.
A Corporation is owned by shareholders and the corporation itself, not the shareholders, is responsible for the assets and debts it accrues. Corporations are meant for larger companies that plan to have multiple employees. Corporations must pay federal and state taxes in addition to taxes on their income. Your personal assets are protected under a corporation. But you may get taxed twice. Once under the corporation and once under the money your shareholders make from it.
An S Corporation is a small business corporation. S corps do not get taxed twice like corporations. The company’s assets, profits and losses can be taxed under the individual who owns it. The business itself is not taxed. Benefits of S Corps include more write-offs on business expenses. An S Corporation is a small business corporation. S corps do not get taxed twice like corporations. The company’s assets, profits and losses can be taxed under the individual who owns it. The business itself is not taxed. Benefits of S Corps include more write-offs on business expenses.
Limited Liability Companies, or LLCs, are comprised of members who act as owners of the company. Depending on jurisdictions you may have one member, or more. LLC business entities are not taxed. Instead the taxes are passed on to the members. LLCs may also apply to become an S Corp to receive expense write-offs. Individual members are protected from the decisions of the collective members. In an LLC, members are protected from lawsuits and debts accrued by the company as a whole.
Sole proprietorships known as S Props are owned by a single person and are not incorporated. The individual owner is responsible for the business’s assets, debts, losses and liabilities. The owner of the S Prop is responsible for the taxes on the business and can easily file with their own income taxes. Consequently, the owner is responsible for any lawsuits the company receives.
A partnership is a business structure that has two or more individuals acting as owners equally responsible for the company. Partners may choose to enter a general partnership, limited partnership, or joint venture. The taxes, profits, losses and debts are passed on the partners and the business itself does not have any taxes.