Updated: Mar 31, 2020
Let’s start off with Sole Proprietor. It’s the simplest form of business and can operate under the owner’s name or Fictitious Business Name. (Name other than the owners.) It has one owner. The Income and Losses of the company are taxed on the individual’s personal income tax return.
Partnership. Has low startup cost since you are splitting them among the partners. The Profits and Losses for the Partnership are passed through to the Partners. They are then responsible for filing their profit on their own individual tax return.
Limited Liability. The purpose of Limited Liability is to protect the owners from the business liabilities. Single Member LLC is taxed like a sole proprietor. Partnership in an LLC allows members elect to be treated like a traditional partnership for tax purposes. LLC filing as a Corporation allows members to choose to file as if they were a corporation.
S-Corp. You are able to issue stocks as a corporation. Governed by directors, officers, and shareholder as a corporation. Owners and shareholders has the same protection as if it was a corporation BUT there is no double taxation. It’s a pass-through taxation.
Corporation. Share holders are liable up to the amount of their investment. Substantial amount of funds can be raised by selling shares or issuing bonds. Double taxation can occur depending on the type of corporation.
Do you know the advantages and disadvantages of each business structure?
Which business structure is best for you and why?
Are you familiar with which business structure requires an operating agreements, articles of incorporation, conflicts of interests and bylaws? Do you even know what these are?
If you would like to learn more about this topic, please feel free to take our “Is starting a business right for you?” Workshop.