Are you planning to start a business? Then remember no one business type is the best. The business you plan to do depends on a couple of factors, according to Eric Dalius. Firstly, these include your priorities, the laws related to the tax in your state, and your unique situation. Before starting a business, it is essential to know about every entity type to decide your business.
A Brief on The Various Types of Business
Take a look at the various types of business if you plan to start one,
Sole Proprietorship
It is an easy and quick means to begin a business. It does not need any specific costs or any prerequisites. All that you need is a permit or license or a zone variance and also a tax number. The best part is since you are the sole owner; you will be in complete control. According to EJ Dalius, it is the right type for beginners.
General Partnership
A general partnership is akin to a sole proprietorship. This process is easy and will not take much to make. No special fees or legal papers are needed. A partnership agreement with the second party will be a smart choice to stay protected.
Corporations
Here, all you need to do is fill the application for the charter, which will throw light on your corporation’s purpose, the names and addresses of the incorporators, the type and amount of capital stocks which your corporation can issue, and the stockholder’s privileges and rights. It is of three kinds – C Corporation, S corporation, and nonprofit corporation. C Corporation is ideal for-profit corporations; your business needs to have a “C” tax classification.
It offers flexibility, and people of all citizenship can own this along with other business entities. The best part is, you will have unlimited shareholders. S corporation again is similar to C Corporation. However, you need an extra form to inform the IRS for paying tax as the S corporation.You can do this through a pass-through entity, which means the owner pays the total income tax with the income received via the corporation. The entity will not be taxed, leading to low tax on corporate income.
Non-profit Corporation
This is a form of organization that will not make profits from the business. Instead, its primary aim is religious, charitable, scientific, or educational work. Most non-profit corporations obtain this IRS 501 (c) status, enabling them to reap the perks of postal discounts and tax benefits.
Limited Liability Company (LLC)
This is new to the world of business. If you plan to begin a business with legal liability protection and simplified tax, it is best to go with LLC.
Cooperative
This is a type of business that people own and operate for mutual benefits. Cooperatives may be unincorporated or incorporated.
Eric J Dalius concludes by stating to weigh each business type’s pros and cons before choosing one.
