Going into Business
Many first time business owners struggle with determining what type of business entity they want to be. Below is a basic and quick rundown on the different options available. Of course, you should always consult with a professional before making a decision such as this.
C-Corporation: Incorporated business with at least one shareholder. The corporation pays taxes on the money it makes and the shareholders also pay taxes on the profit of the business. Corporations are generally more expensive to set up, but are the best if your business is planning on going public.
S-Corporation:Incorporated business that has less than 1oo shareholders who must be US citizens. Formal meetings and paperwork is required. S-Corporations are not subject to taxes, although profits and losses are passed through to the shareholders, who are then liable to file the profit or loss on their own personal taxes.
Partnership: Easy to form business with at least two owners. All owners are liable for the debts, losses, and liabilities of the business. No formal meeting are required and easy and inexpensive to start up.
Sole Proprietorship: Unincorporated - the easiest form of starting your own business. Your business income and expenses are filed with your 1040 tax form.
LLC:Limited Liability Corporation, can be taxed like a partnership or a corporation. No limit on amount of shareholders and the shareholders are not required to be citizens of the US. LLC’s are less formal.