Filing your business can get a bit confusing, especially if you have never filed before. Depending on how you file, it could affect the amount you have to pay out at the end of the year. To help you decide how you need to file your business, we are going to take a look at a few of the most common ways that people file their business.
The 7 Most Common Way to File Your Business
Sole Proprietor
If you’re in it all alone, you’re not alone! This is one of the most common types of business because it just takes you! The major point to note with a sole proprietorship is there is no legal or financial distinction between the business and the owner. That means you are fully accountable for all of your business profits, liabilities, legal activities and the like. There aren’t legal forms you need to go through either, so that’s even less work to get started!
Partnership
Help from your friends isn’t bad, especially when you are a teamwork oriented person already! If that’s your style, a partnership might be the way to go for two or more people venturing into business together. This route requires you and your partners to file the business and receive a license, but there are many tax benefits that come with your new partnership. Keep in mind though, you and your partners are responsible for the business responsibilities. That includes financial and legal.
Limited Partnership
Similar to a Partnership, a Limited Partnership is a great bet for businesses who are looking for help from outside investors. With an LP, the limited partners are not liable for debts and don’t participate in the day to day operations of the business.
Corporation
A Corporation allows your business to take on a “public” or “private” status. With a corporation, your company will be taxed, and you will receive personal taxes. With this being said, this is one of the most common structures for larger conglomerates, and is more than likely the way your company that you used to work for was run.
Limited Liability Company (LLC)
A limited liability company is a newer type of business filing that has seen steady growth. An LLC brings together many benefits from the corporation status and sole proprietorship. It lets your company start up with less paperwork, and move their profits and losses to the member’s personal taxes instead of being taxed as a corporation identity. It also helps you take away a lot of personal responsibility for business decisions.
Nonprofit Organization
Nonprofit basically speaks for itself, but let’s just in a bit more. Basically, anything the organization makes must be kept by the organization to pay for its expenses, programs, payroll, and other organization needs. This type of filing also requires filing an application to the government, so they recognize your organization as a nonprofit organization.
Cooperative
A Cooperative is a self sustaining organization. In many ways, cooperatives are like nonprofits, but they use all of their resources to help the members of the cooperative. The members of the cooperative split their funds among the members instead of having to shell out to stakeholders. The major thing to note about cooperatives is the have a long list of requirements to be legitimized. You will need bylaws, membership applications, and a board of directors with scheduled meetings.
Conclusion
There are so many different ways to file your business, but it really comes down to making sure you are meeting the legal requirements for your business needs. Depending on your industry, there may be more beneficial ways to file your business, and you should seek the help of business professional.
Do you need help filing your business?
Find your company direction with Bell Solutions LLC.