When starting your own business, there are many different things in which you need to do before opening your doors up for business. From the idea itself, you then must choose a location, finance the business, and figure out what type of business structure your business is. Depending on which type of business structure you are, you have a specific income tax form in which you have to file with. The five types of most common business structures according to the IRS is, Sole Proprietorship, Partnership, Corporation, S Corporation and Limited Liability Company. Each structure has advantages and disadvantages so that is why as a business owner, you should figure out which type of structure is right for you.
When a business is structured as a Sole Proprietorship, more than likely there is just one owner. Sole Proprietorship are the most common and easiest types of formation since they are not incorporated. Since a Sole Proprietorship is not a real legal entity, legally you are held responsible for anything and everything the business does. If there is an accident or your business is not profitable, your personal assets are at stake. Therefore, anything that you own can be taken from you if you cannot pay. When a person dies or stops doing business, the business easily can no longer exist. Management and the Operations of the business are held by one person only, the owner. When dealing with taxes for sole proprietorship, the income or loss is passed down to the owner personal tax return (1040) as a regular taxable income. Thus there is no special type of form to file for being in business. If the company has a loss, the owner can deduct a portion of their losses from their own taxable income. Trying to raise capital is difficult for th...
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...siness tax id number? Are you comfortable with putting personal assets on the line for your business? How much control do you or your partners want to have? Will the company be owned by others investors with no single owner?
Works Cited
Bizfilings. "A Guide To Forming Your Business." A Guide To Forming Your Business. Bizfillings, 25 July 2011. Web. 1 Dec. 2013.
Internal Revenue Service. "Business Structures." Business Structures. IRS, 14 Nov. 2013. Web. 1 Dec. 2013.
Lamar, Barbara. "Comparison of Business Entities." Comparison of Business Entities. Lamar & Associates PLLC, 29 Apr. 2013. Web. 1 Dec. 2013.
Volusion. "Starting A Business." Starting A Business Types of Business. OnlineBusiness, 3 Apr. 2012. Web. 1 Dec. 2013.
Small Business Association. "Choose Your Business Structure." Business Structures. Small Business Association, 12 Mar. 2012. Web. 1 Dec. 2013.
[ONLINE] Available at: http://www.businessdictionary.com/definition/entrepreneur.html. [Accessed 05 April 2016]. About | Collette Dinnigan. 2016. About | Collette Dinnigan. [ONLINE] Available at: http://collettedinnigan.com/about.
U.S., S., & Administration, B. (2014, March 15). Business Licenses & Permits Results. Retrieved from http://www.sba.gov/bgsearch/permitme2_0.do?q=97530&pstate=0&bcat=89
Works Cited The Allbusiness Web site provides answers and articles about corporations. http://www.allbusiness.com Retrieved May 22, 2011. Mallor, J., Barnes, A.J., Bowers, T., & Langvardt, A.W. (2010). The 'Standard' of the 'Standard'.
Grimsley, S. (2014). Organizational divisional structure: advantages, disadvantages and example. Education portal. Retrieved from http://education-portal.com/academy/lesson/organizational-divisional-structure-advantages-disadvantages-example.html
The owner reports business gain or losses on his or her personal income tax return. A sole proprietor is taxed on all assets from the business at appropriate personal tax rates. The corporation income, and acceptable expenses, is reflected on the person’s tax return. All corporation income is taxed to the owner in the year the business acquire it, whether or not the owner take away the money from the business. No disconnect federal income tax return is acquired of the sole proprietor.
As SBA.gov points out, because you and your business are one and the same, the business itself is not taxed separately, the sole proprietorship income is your income (Sole Proprietorship, n.d.). Because the company does not for see large profits during the first year and they will be off set with expenses creates an advantage for us. In addition to this, there are low to no costs for creating a sole proprietorship other than the DBA filing fee. Since our booking keeping will already be setup for a sole proprietorship it will not be difficult to transfer the company to a LLC. Once the company transitions into the LLC, our personal liability will be removed. As the company grows over time with the LLC, it will be easier to add new shareholders or partners on since there are no limits within a
There are many different types of business structures, but if you own and operate a business that it is a sole
Katz, J. A., & Green, R. P. (2014). Entrepreneurial small business (4th ed.). New York, NY: McGraw-Hill/Irwin.
The Holding organization and subsidiary organizations may structure pyramid of structures whereby the subsidiary organization may hold controlling enthusiasm toward different organizations framing guardian organization.
Begin with the laws pertaining to the basics of starting a business. Do you need a business license or a special permit? Are you planning to hire employees or will you go it alone? If your business sells goods, it will need to pay sales tax. Look at each business aspect carefully to understand which category of laws apply to
Before a partnership formation is imminent, the business needs to decide on which type of partnership to form. There are three types of partnerships: (1) general partnerships, (2) limited partnerships, and (3) joint ventures. All three partnerships contain two or more owners, but all partners assume equal division of ownership, liabilities, and profits in a general partnership. Limited partnerships offer limited liability protection based on each partner’s contribution percentage. Joint ventures are classified as general partnerships with limited existence periods. Once a type of partnership has been determined, the business fulfills a series of requirements before the partnership can be successfully formed. The first step is to register
Organizational structure is the way that an organization arranges people and jobs so that work can be performed and goals can be achieved. Good organizational design helps communications, productivity, and innovation. Many organization structures have been created based on organizational strategy, size, technology, and environment. Robbins and Judge (2011, p. 504) listed three common structures: simple, bureaucracy, and matrix. In this post the author will describe the matrix structure, and discuss its advantages and disadvantages.
Starting a small business is often one of the hardest things a person can do. Some people start a business out of pure fascination, or even as a hobby. Whether starting a business for personal reasons or simply the grandeur to make loads of money, everybody needs to have a plan. Starting a small business is no easy task and can take days if not months to prepare. The most important aspect to have is the tempura and heart to start a small business, as without passion, no business can succeed. One has to be his or her own boss, make dream, reality and be willing to market and sell a product. It takes a lot of discipline, long hours and hard work, something many do not have. However with the right willingness, passion and dedication a business can be the start of something big.
Business Names: Idea 7 - Consider the connotations and sound of the words for each option.
Business structure is a critical factor to determine a company 's success or failure. Generally, larger organization has a more complex organizational structure. In the case of H&M, they had adopted matrix structure, one of the traditional organizational structure, into their business. As shown in figure 1, range of functional groups is listed horizontally across the table and on the other is product/task with a manager taking control of each. The functional structure is divided