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Archive for Choosing A Business Structure

The Pros and Cons of Sole Proprietorship

If you’re wondering about the best business structure for your new company, side business or freelancing gigs, know that your choice in legal structure can have a significant impact on your business, determining everything from how you pay taxes, to how much paperwork you’ve got to contend with, to what happens if you get sued.

The sole proprietorship is the simplest way to operate a business. If you’re self-employed or conducting any kind of business and haven’t picked a formal business structure, then by default, you’re operating as a sole proprietor. This business structure has advantages and disadvantages, depending on your specific set of circumstances. Here’s what you need to know:

The pros

The biggest advantage of the sole proprietorship is that it’s simple to form and manage. All you need to do to run a business as a sole proprietor is to register the business name via a DBA — if you will be using a business name that’s different than your own name — and get any required local business licenses. If you’re running a consulting business under your own name, you don’t need to register the name. However, if you’ll be using a different name (like Joe’s Consulting), then you’ll need to file a DBA (Doing Business As ) with your state to use the name Joe’s Consulting. Continue reading “The Pros and Cons of Sole Proprietorship” »

Answers to Your Frequently Asked Questions About Incorporation

Do you know the difference between an S Corp and a C Corp? Have you ever wondered if you should form an LLC for your business or where you should incorporate? Or maybe you’re not sure if you need to create a non-profit for your activities? These are just a few of the frequently asked questions about incorporation.

Assembled below are all the answers to the most frequently asked questions when it comes to incorporating your business. If you’re a small business owner, read on to learn more about the various business structures and how you should incorporate your business.

Frequently Asked Questions About Incorporation

1. What are the benefits of incorporation?

The main reason to incorporate (or form an LLC) is to minimize your personal liability. Once your business is incorporated (either by forming an LLC or Corporation), it exists as a separate business entity. Essentially, you put a wall separating your personal assets from anything in the business. Continue reading “Answers to Your Frequently Asked Questions About Incorporation” »

Tax Benefits of the LLC vs. the S Corporation

If your small business is thriving, you’re probably wincing come tax time. Did you know you can reap many tax benefits if you set up your business as either an LLC or an S Corporation? Read on to find out what these benefits are, and how you can take advantage of them.

Benefits of the S Corp

One of the big reasons people decide to incorporate is that doing so protects their personal assets from liability. That means the company — rather than you as an individual — is responsible for liabilities brought against it through legal action.

Operating as a corporation — specifically an S Corp — helps you “pass through” losses to individuals on tax forms. So you as the owner can claim your corporation’s expenses to offset your income and reduce your tax liability while avoiding double taxation. Continue reading “Tax Benefits of the LLC vs. the S Corporation” »

Tips From A Pro: The Tax Benefits Of Properly Structuring Your Business

Have you ever wondered if your business is legit? Is there a way to reduce self-employment taxes? If so, read on to learn more about business structures and freelancing.

By default, you’re a sole proprietorship.

If you’ve never actually chosen a business structure, then your business is a sole proprietorship. As the simplest business structure, the sole prop doesn’t separate your personal and business finances. That means that if your business is sued or can’t pay its debts, you may be required to tap into your personal savings and property.

A lot of small businesses transition to a formal business structure like an LLC or Corporation. These structures will help protect your personal assets from any liabilities of your freelance business. And in some cases, there can be tax benefits as well. Continue reading “Tips From A Pro: The Tax Benefits Of Properly Structuring Your Business” »

How to Set Up and Structure Multiple Businesses

Today’s small business owners often earn income through a variety of ventures. For example, a restaurateur may open a wine shop or a caterer may also double as a part-time copy editor.

If you’re running multiple business projects, you’ve probably wondered what’s the best way to structure all these ventures. Should you form one corporation to cover them all? Should you form an LLC for each one?

You need to answer these questions from both a marketing and legal perspective. For marketing, you need to consider the markets and target customers for each venture. Are they synergistic? Are they relevant and will they appeal to the same customer?

If so, it makes sense to market them under a shared brand. For example, it may make sense for a restaurant and side wine shop to share the same branding.

In other cases, your businesses might target different customer types (for example, the copy editor and caterer). In this case, you want to use different websites, business names and branding for each venture.

But how do you structure multiple business ventures from a legal perspective? Continue reading “How to Set Up and Structure Multiple Businesses” »

March 15 is the Deadline for Electing S Corporation Status for Existing Corporations Says CorpNet.com

Logo of the Internal Revenue Service

Here’s CorpNet’s latest press release about the March 15 deadline to elect S Corp status.

For a corporation filing taxes, March 15 is a critical tax deadline. But for a small business owner who has incorporated a business as a C Corporation or a Limited Liability Company (LLC), March 15 is also an important deadline, as it’s the last day to elect S Corporation status for the 2013 tax year. Continue reading “March 15 is the Deadline for Electing S Corporation Status for Existing Corporations Says CorpNet.com” »

Choosing the Right Partnership for Your Business

In recent years, various new legal structures have emerged, including the LLC (Limited Liability Company). That’s good news for small businesses—because let’s face it, not all businesses are the same, and the same corporation structure isn’t right for everyone.

Yet more options bring new questions about which business structure to use. For many entrepreneurs, the process of picking a business structure is uncharted territory.

If you’re a small business owner or service professional, here’s a quick primer on two important legal structures: the LLC and the LLP (Limited Liability Partnership). We’ll explore the key differences and details to help you determine which is better for your business. Continue reading “Choosing the Right Partnership for Your Business” »

Announcing the Launch of the Business Structure Wizard

We at CorpNet are thrilled to announce that we’ve launched a free online tool, the Business Structure Wizard, to help you select the right company structure for your new or existing business.
“Choosing a business structure can be a tough decision for the new business owner. They don’t know whether they should incorporate, form an LLC, or simply file a DBA (aka “doing business as filing”)  and remain as a sole proprietorship or partnership,” explained Nellie Akalp, CorpNet.com’s Founder and CEO. “We designed the Business Structure Wizard to be a very accessible starting point for anyone who wants to start a business or change their existing business structure.”

About the Wizard
The Business Structure Wizard guides users through a series of basic questions on their business, industry, finances, and long-term plans. The entire wizard should take approximately 5 minutes or less to complete and provides a recommended company structure based on the user’s responses. Go ahead: give it a try.

The wizard includes the following recommended business structures based on the user’s responses: LLC (Limited Liability Company), C Corporation, S Corporation, Sole Proprietorship, Partnership, LLP (Limited Liability Partnership), and Non Profit Corporation. Help text provides additional details and explains the significance of each question. In addition, you can find helpful resources on each business structure, and if you’d like CorpNet.com can file and form the recommended business structure for you.   Continue reading “Announcing the Launch of the Business Structure Wizard” »

I’m a Business Service Provider: What Business Structure is Right for Me?

If you specialize in providing intangible deliverables (like graphic design, writing, consulting, legal services), you may be wondering what business structure best suits your needs. It really boils down to how you want to run your business, but bottom line is: you should choose one. Incorporating or filing an LLC can provide you legal protection of your assets, which is something every business owner should have.

Looking at Your Options

There are several business structures out there, but the two primary ones you should consider are the corporation and the LLC. Both provide legal protection, but have a few key differences.

Why Consider the Limited Liability Company (LLC)

If you’re looking for minimal formality and paperwork, the LLC is a great option. You won’t have to fill out your annual report the way you would with a corporation, nor have a Board of Directors. If anyone tries to sue you, it would be deflected to the LLC, not your personal self, keeping your assets safe. LLCs are taxed on your personal income tax unless you specify otherwise. You’d report your profit and loss on your personal taxes, and not have to deal with “double taxation” like a corporation might. Continue reading “I’m a Business Service Provider: What Business Structure is Right for Me?” »

Will an LLC help lower your business taxes?

The key reason to form an LLC (Limited Liability Company) is to shield the personal assets of the owners from that of the business. This means that if your company has bad debts or is sued, banks and other lenders cannot seize your personal property. But let’s face it. For many small business owners, questions about forming an LLC typically boil down to a single topic… taxes.

Whether it’s driven by a desire to escape self-employment taxes or looking to avoid that ‘double taxation’ whammy, small business owners ponder which legal structure is right for their business and financial situation.

The LLC is often associated with ‘pass-through taxation’, meaning the LLC itself does not pay taxes. Rather, income from the business is passed to the company’s owners (aka members) who then claim these profits on their personal tax forms.

However, the LLC actually offers flexibility when it comes to federal tax treatment. This is because the LLC is an entity created by state statute. The IRS allows the LLC to be taxed as a corporation, partnership, or sole proprietor, depending on elections made by the LLC and the number of members.

 

Continue reading “Will an LLC help lower your business taxes?” »