What Business Entity should you assume?

When starting a new business venture or expanding on an existing enterprise, you must think about what will benefit you most. It will benefit you much more if you consider your options carefully especially, concerning what legal structure you would assume for your business.

It would be to your advantage to ask for competent advice from financial and corporate legal professionals. By consulting them, you can determine what form of business entity will best serve your tax and business planning requirements.Here are the following business entities you can assume:

1. Sole Proprietorship business enterprise – this business entity is the simplest form of business as a starter. As a standard, all you are required to do is to start your business by operating under your name or a fictitious name, for that matter. You need to have a Social Security number in order to start your sole proprietorship business. You also need to obtain the necessary permits or licenses as required by your state. After you have accomplished or have all of these, then you are in business.

Now for the cons of sole proprietorship form of business, one distinct disadvantage in operating as a business with sole proprietorship is the fact that it is subjected to pass-through form of taxation. The profits of the owners are declared on the personal owner’s tax return. Thus, you have no protection against liability. As a sole proprietor, too, your personal assets can be achieved to satisfy liabilities or some business debts.

A sole proprietorship business only has one owner. If you plan to have a partner in your business, you can take on the partnership business entity or any other form that is not a sole operation.

2. Partnership business identity – this is a business identity that is usually comprised of two, even more individuals. Under the circumstances, a partnership can also with two business entities, coming together as one. It can also be a team up between a business entity and an individual.

This kind of identity is also relatively low cost and simple enough to maintain and create. However, it creates liability and tax issues, too.

3. General Partnership – most partnerships are usually formed as general partnerships so that the partners involved could all have management authority.

4. Limited Partnership – general partners who direct the business in this type of business entity could be one, two or more. Meanwhile the limited partners may also be one, two or more will have no role in management. General partners could be some other business entity like the LLC or corporation.

5. Limited Liability partnership – the partners in this kind of business identity can be protected against the obligations and debts entered into by the partnership. They can also be guarded against liabilities for the actions of their employees of partners where they do not have a part or a supervisory role. Still, the personal assets of the partners remain subject to other sum unpaid they personally certified.

6. Limited Liability Company or LLC – this kind business entity enjoys various advantages similar to that of a corporation, including the limited liability but avoids the important burdens that are required of corporations. It also retains some characteristics of entities that are unincorporated like the sole proprietorships and partnerships

7. Corporation – this business entity is formed under the laws of the state. It can be considered by the state as another legal person independent forms its directors and shareholders. It can enter into contracts, pay taxes, acquire loans, and other business transactions in behalf of itself.

A corporation can take other forms like the C Corporations, S Corporation, Professional Corporation or Nonprofit corporation.

What form of business entity would you prefer? Be sure to learn everything you need to know in creating a business before deciding.