Now that you’ve started your new business and decided on a name, it’s time to officially register it. How can you decide which type of business structure is right for your company? Here are the common choices:
As the name suggests, a partnership is a business with more than one owner. There are different types of partnerships to consider when selecting your business structure; options include general partnership, limited partnership, and joint venture.
If you decide to register your business as a corporation, it will be a C corporation by default, unless you specifically register as an S corporation. The difference between the two comes down to taxes; the earnings from C corporations are taxed twice. First, the net income is taxed, and then shareholders pay tax on distributions.
An S corporation is similar to a C corporation, but revenue is only taxed once at the shareholder level. In order to qualify for S corporation registration, your business can have no more than 100 shareholders.
If you are operating under your legal name and you don’t have any employees, your business falls under the sole proprietorship category. If you’re a freelance writer, for example, you are a sole proprietor. You won’t need to take any action to register this type of business.
A cooperative (also referred to as a co-op), uses a united business structure in which members of the co-op share decision-making responsibilities, liability for debts, and revenue. Co-ops usually fall into three categories, with options including worker-owned businesses, producer co-ops, and consumer co-ops.
Limited Liability Company (LLC)
This type of business combines the pass-through taxation of a sole proprietorship or partnership with the limited liability of a corporation. A lot of business owners choose LLC for their company’s structure because they feel it effectively combines the best of both worlds.
Do you need cash now to help with business expenses? If you’re receiving structured settlement or annuity payments, you can sell some or all of your future payments and receive the cash now in a lump sum. The money you receive can be used to help fund your new business. Contact Peachtree Financial Solutions today to learn more!
Nothing above is meant to provide financial or tax advice. You should meet with appropriate professionals for such services.