Three Reasons Why Your Business Structure Matters

The business structure you choose affects your business operations, the paperwork you must file, and how much you pay in taxes. To ensure your company’s future success you must study the available entities to choose from and their tax requirement.

• Sole Proprietorship- A type of business or entity run by one person for his or her concern benefit (self-employment tax, personal tax).

• Partnerships- Based on an agreement between two or more persons who join together to venture for profit (self-employment tax, personal tax).

• Limited Liability Company- A legal business entity that helps protect business owners’ personal assets from business debts and lawsuits (self-employment tax, personal tax, or corporate tax).

• Corporation (C corp)- A legal entity that is run by an organization or group of people, and that is separate and distinct from its owners (corporate tax).

• Corporation (S corp)-a business structure that is permitted under the tax code to pass its taxable income, credits, deductions, and losses directly to its shareholders. It is run by one or more people, but no more than 100 (personal tax).

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