It is worth your while to take some time and consider the right structure for your business, because it will have a great many implications down the road on how your businesses is taxed, as well as how your personal property may be protected.
This is easily the most popular business structure chosen by small business owners, and the most important feature of this arrangement is that business profits can be reported on your personal tax return. That makes it the simplest structure to choose, although there are drawbacks to it, for instance the fact that you are unprotected against legal action, and your personal assets may be exposed.
This is another unincorporated business structure, which has multiple partners as owners. All profits are divided among those partners and reported on their personal tax returns. There are several types of business partnerships including general partnerships, limited partnerships, and limited liability partnerships.
Limited liability company
An LLC is a business structure which is kind of a hybrid between a corporation and a sole proprietorship. The structure limits the personal liability of owners, but calls for all profits to be taxed on a personal level or on a corporate level, as determined by members.
This type of corporation has less than 100 shareholders, all of whom must not be involved in any other for-profit business. Profits are taxed on the personal tax forms of members, and all members have limited liability from any legal actions.
A C Corporation has its profits taxed twice, once on a business level, and again when earnings are distributed to shareholders. Shareholders do have limited liability for the businesses debts, which shields their personal assets against legal action. This type of corporation can also have multiple classes of stock, and can be comprised of any number of shareholders whatsoever.
Need funding for your business?
We specialize in helping small businesses, especially those which need funding to get to the next level of growth, or to sustain current success. Contact us at Black Wolf Capital Group, so we can consider some possibilities for funding your small business.