Launching a small business will prove to be fun, exciting, and difficult. Even if you’re done it before, you’ll want to take your time and work meticulously. After all, you’ll want to ensure that everything is perfect. When launching a small business, you’ll need to pick a business structure. Which one is going to work best for your business? Ultimately, the answer depends on your unique circumstances. Read the information below to find out which is best for your new business.
LLC
In general, most small businesses decide to pick the LLC structure because it offers several benefits. As a limited liability company owner, you’re going to receive protection from lawsuits. The owners of the LLC are called members. Furthermore, an LLC can have multiple members. One thing unique about LLCs is the fact that they’re not taxed as separate entities. Instead, the profits are going to be passed through to the members. When you own an LLC, you’ll have to report the profits on your federal tax returns.
Forming a limited liability company is wise for many new businesses. More information about the benefits of launching a small business can be found online. Check it out before doing so.
S-Corporations
Some businesses will register as s-corporations. Although this isn’t right for everyone, it offers a few unique benefits. You’ll find that this type is developed through an IRS tax election. By becoming an S-corporation, a business can avoid double taxation. Once you’ve launched an S-corporation, the business’s incomes and losses will be passed to each shareholder. Therefore, you’ll have to report this information on your next tax return. One of the best things about owning an S-corporation is the fact that you won’t be responsible for any of the company’s debts or liabilities.
The only downside is that you’ll have to meet certain requirements before you can open this type of business. Still, it is a good choice for many new businesses.
Partnership
There is a good chance that you’re going to launch a new business with a friend or family member. If so, you may want to open a partnership. A partnership can accommodate two or more people. A partnership requires two or more people to contribute skill, property, or money to the business. Plus, the owners are going to share the business’s losses and profits. If you own a partnership, you’ll have to file an annual return to report information about your losses and gains. However, the profits will be passed through to the owners.
