Which types of business structures are there?
There are four basic business structures to choose from. Keep in mind that there are legal rules and there are tax rules. You may hear terminology that that confuses the two, but consider them separately. Below are the most common forms of business containers and their corresponding tax treatments.
- Corporation – Can be taxed as a C corporation or an S corporation
- LLC – Can be taxed as a C or S corporation, a partnership or a sole proprietor
- Partnership – Taxed as a Partnership
- Sole Proprietor – Taxed as a Sole Proprietor
Which types of business structures provide liability protections for its owners?
The type of structure you have will dictate the requirements to form it, but most business structures will require some state filings and some IRS filings. Some structures will require that you have internal documents in place that don’t actually get filed anywhere – you just have to have them.
Is there anything I have to do on a regular basis for my business?
Depending on the type of structure, you may have yearly filings and required meetings. The state of Florida may require you to file annual reports and the IRS may require that you file a tax return for your business. There are also internal documents that you may need to have each year, but don’t actually file anywhere.
How do I know what type of business structure is right for my business?
There are so many factors to consider when choosing a business entity, that no one answer will be right for everyone. We often have people say they want an LLC because it’s the simplest to form. This is a common misconception. An LLC is actually one of the most complex and sophisticated business structures available. It is appropriate only in certain circumstances. You should consult with an experienced business attorney for help in determining the appropriate structure for your business.