It is possible that you may have seen advertisements on television or in magazines that offer the ability to start a business through a limited liability corporation. These types of arrangements have been around for years but they are becoming more common as time passes. In fact, many people believe that it is better to use a sole proprietorship or a corporation so that you have more control over your assets and can ensure that they are protected. There are some pros and cons to each type of arrangement that you need to think about before making a final decision.
One of the main reasons that people choose to start a business through a sole proprietorship or a corporation is because they can avoid paying taxes on their income. While both of these options are tax effective, they do have their differences. A sole proprietorship does not have to pay corporate taxes while a corporation does. However, many states allow a sole proprietorship to be taxed as if it were a corporation.
Another reason to use a limited liability corporation or a sole proprietorship is because of the less paperwork. If you run a small business you will probably already have enough paperwork to get started with a sole proprietorship. This can be very convenient for you because you will only have to do one return. However, if you decide to use a corporation then you will have to deal with some additional paperwork and this could take longer than if you had gone with a sole proprietorship. Many small businesses also have very little red tape to worry about if they filed themselves under a sole proprietorship; however, they will have to pay taxes on any income that they bring in.
If you are still deciding which type of business structure to use then you should keep in mind that some states allow both ways of doing business. For example, some states allow you to form a limited liability company and then you can continue to use it as a separate entity even if you are a sole proprietor. Others still allow you to form a general partnership and you can continue to use it as a separate entity. No matter what way you decide to form your business you will need to find out if it will be easier for you to do business. For example, if you will have less paperwork then you might find that it is easier to file your tax returns and pay your bills.
Limited liability companies have many advantages. They are also known to be better for the environment because you do not have to pay taxes on your personal activities as a business. However, there are some disadvantages to a sole proprietorship or a limited liability company that you need to consider before deciding if it is right for your needs. Most people think that they will have more freedom when running a LLC than they would have with a sole proprietorship. However, you will not have the same freedom of choice when it comes to choosing employees and you may have to deal with some red tape in the form of licensing and other things that you may not have to deal with if you formed a general partnership.
If you are looking for a good way to get started you should look into a general partnership. This can be the best way for you to get started and you can continue to use it as you go along without having to worry about incorporating or using your personal brand. You can also take advantage of tax breaks while using a startup business. However, you may want to consider forming a corporation first if you really do want to reap the benefits of a startup business. A corporation is an asset that a business owner can protect and in the long run benefit from because it is considered a professional entity.