GUIDE TO SELECTING YOUR SMALL BUSINESS LEGAL STRUCTURE
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Business Entity Overview
One important consideration when starting your business is determining the best legal organizational structure. Why? Because it will affect operating efficiency, transferability, control, the way you report income, the taxes you pay and your personal liability. Four basic structure types are available:
Partnership - general and limited
Corporation — S corporation, C corporation
Limited liability company (LLC)
The choices can be complicated — and errors can be costly. Business legal structures are regulated by state governments, but your county or municipality also may have license requirements.
What’s more, current tax laws make it difficult to change your legal structure after you begin operating. Making the right decision before you open for business is very important.
How do you decide which legal structure is best for you and avoid potential problems? Consult with a certified public accountant (CPA). A CPA can help you make well-informed choices, explain how business structure affects your organization’s bottom line and file the necessary paperwork to start your business, if you’d like.
Sole Proprietorship Overview