DIFFERENT KINDS OF BUSINESS ENTITIES — CORPORATION
DIFFERENT KINDS OF BUSINESS ENTITIES — CORPORATION
There are different kinds of business entities which present business owners with various advantages and disadvantages. In order for you to know which appropriate entity to adopt for your own business, then it is important that you have an idea about these business entities.
SOLE PROPRIETORSHIPS
The process which you have to go through for you to be able to operate as a sole proprietorship is very simple however there are many concerns to consider.
Personal Liability
Deficiency of Stability – You can only raise capital if you are eligible to get a personal loan
Deficiency of Investment – has little chances of being able to take part in such matters as federally qualified pension plans and medical reimbursement plans
General Partnership
This is formed when two or more people agree to conduct a business together. Partnerships are also easy to create however they are taxed in conformity to the tax levels of each partner. This type entity also does not offer limited liability protection.
Limited Partnership
Limited partnerships are composed of at least two types of members: general partners and limited partners. General partners agree to be completely accountable of all the possibilities implicated when managing and running business. Alternatively limited partners are shareholders who take part of the risks however only depending on how much they have invested. These people are not involved with the administration of the entity. Limited partnership provides limited liability protection, but privacy is not one of its benefits.
Limited Liability Company
The limited liability company (LLC) is a form of business which combines the attributes of corporations, partnerships and sole proprietorship into a business entity more preferred by business owners. The following are a list of some of its advantages:
- Asset Protection
- Tax Advantages – The tax rules governing partnerships are more flexible.
Ability to Raise Capital – Easy to get new stockholders with no limit on their number.
Easy to Run – simple agreement process among owners, meetings and minutes are not required
Disadvantages
Obtainable only to private companies.
Loss of Pass-Through Tax Treatment: This happens when an LLC is considered as a corporation as a result of an election filed with the IRS and the LLC possesses nearly all of the criteria for one entity to be considered as a corporation. Pass-through treatment is still employed if it is taxed as a partnership.
State Tax Treatment: Several states require business owners to pay an income or franchise tax. The Nevada LLC, however, does not impose tax.
Corporation
A corporation is an entity, which experiences the most protection compared to all others since a corporation is deemed as “person” which has its own rights and is considered separate from its stockholders.
In fact, you can reside anywhere you like because the requirements which apply to your corporation depends only on where the corporation is being operated. The Nevada corporation presents the most appealing benefits for the protection of your business.
There are different kinds of business entities which present business owners with various advantages and disadvantages. In order for you to know which appropriate entity to adopt for your own business, then it is important that you have an idea about these business entities.
SOLE PROPRIETORSHIPS
The process which you have to go through for you to be able to operate as a sole proprietorship is very simple however there are many concerns to consider.
Personal Liability
Deficiency of Stability – You can only raise capital if you are eligible to get a personal loan
Deficiency of Investment – has little chances of being able to take part in such matters as federally qualified pension plans and medical reimbursement plans
General Partnership
This is formed when two or more people agree to conduct a business together. Partnerships are also easy to create however they are taxed in conformity to the tax levels of each partner. This type entity also does not offer limited liability protection.
Limited Partnership
Limited partnerships are composed of at least two types of members: general partners and limited partners. General partners agree to be completely accountable of all the possibilities implicated when managing and running business. Alternatively limited partners are shareholders who take part of the risks however only depending on how much they have invested. These people are not involved with the administration of the entity. Limited partnership provides limited liability protection, but privacy is not one of its benefits.
Limited Liability Company
The limited liability company (LLC) is a form of business which combines the attributes of corporations, partnerships and sole proprietorship into a business entity more preferred by business owners. The following are a list of some of its advantages:
- Asset Protection
- Tax Advantages – The tax rules governing partnerships are more flexible.
Ability to Raise Capital – Easy to get new stockholders with no limit on their number.
Easy to Run – simple agreement process among owners, meetings and minutes are not required
Disadvantages
Obtainable only to private companies.
Loss of Pass-Through Tax Treatment: This happens when an LLC is considered as a corporation as a result of an election filed with the IRS and the LLC possesses nearly all of the criteria for one entity to be considered as a corporation. Pass-through treatment is still employed if it is taxed as a partnership.
State Tax Treatment: Several states require business owners to pay an income or franchise tax. The Nevada LLC however, does not impose tax.
Corporation
A corporation is an entity, which experiences the most protection compared to all others since a corporation is deemed as “person” which has its own rights and is considered separate from its stockholders.
In fact, you can reside anywhere you like because the requirements which apply to your corporation depends only on where the corporation is being operated. The Nevada corporation presents the most appealing benefits for the protection of your business.