Types Of Business Entities
When building your new business structure, you must consider the best possible alternative of the available business structures. While a sole proprietorship is the easiest type to make, there is no individual identity. Personal liability belongs to the owner. if there would be a lawsuit, hazard or you incur debts that you can’t repay, your personal assets are at risk.
The kind of entity you choose has to be based on careful consideration. Each state has specific rules for the structure of each type of entity. You should check out the kind of entity, the regulations and laws pertaining to each in your state and at a federal level.
The choices are – sole proprietorship, partnership, limited liability partnership, corporation, C corporation, S corporation, and LLCs. Sole proprietorship provides the lowest security while corporations and LLCs have limited personal liability for debts or judgments against the company.
When making your entity, it is recommended that you use an attorney to make a written document of the entity’s institution and structure. Your lawyer, accountant or CPA can advise you of the legal and all tax consequences of your selection. Doing your research prior to getting a professional will lessen the time spent with a high-priced professional. Do your due diligence to secure yourself and your family.
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