Running a new business can be one of the most exciting parts of your life. You are taking your life into your own hands and deciding to do something that you love, rather than working for a boss who just doesn’t understand you. But before you get too far into planning your own business and living the good life, you need to make sure that you are set with all the legal and tax information for your business. One of the ways to do this is to make sure that you are picking the right business entity for you.
There are several different types of business entities and they are all going to have their positives and negatives. Some allow you more freedom to make your own choices while others may offer more personal liability protection and some offer some more relief from taxes at the end of the year. But with all of the choices that you can make with business entities, it is no wonder that many new business owners feel overwhelmed in the beginning. When you are ready to start choosing the entity for your business but aren’t sure which way to turn, make sure to contact your local tax professional to get started.
The Different Choices
When it comes to your business entity, there are several different choices that you can make. While there are more than what will be in this list, these are the most common types that are used in most businesses.
The first choice is a sole proprietorship. These are often used for really small businesses such as home based ones, but they provide the least amount of paperwork, do pretty well for deductions, the individual can have full say in the business, and they usually don’t need to worry much about personal liability. People in these kinds of entities like that they are the one in charge with the business and they don’t have to answer to shareholders or other people. Keep in mind though that with this kind of entity, if someone decides to sue you for something related to the business, your personal property could be in trouble.
The next entity is the corporation. This one provides the ultimate in personal liability protection so you will never have to worry about losing the house or other property because someone sues you. But your amount of personal say in the business is limited since often there are stockholders you need to answer to and lots of paperwork that comes along. But there are some tax deductions that are just for corporations so this can be enticing as well.
S Corporations are growing on popularity among business owners. This one is going to offer some of the best of both worlds. You are still going to have the personal say that you would enjoy with the sole proprietorship when you pick this entity, but you can still get the personal liability protection that you are looking for with a corporation. This makes it really attractive since you get the protection that you need with some of the personal control that many people want with their own businesses.
If you would like to know more about these different kinds of business entities or you have some questions about choosing the one that is right for you, make sure to talk to a tax professional in your area. They will be able to answer your questions and ensure that you are picking out the entity that is right for you. This entity is basically going to be the way that you show yourself to the world, so take your time making the right choice so your business has a chance to do well.
Choosing For You
Making the right decision for your business in terms of entities can be tough. There are many different choices and you may wish there was a way to combine them together to get all the benefits in one. But choosing the one that works the best for your business is often a personal choice. What works best for one business may not work the best for your business. For example, if you are just running a small business out of your home such as computer technician or writer, you may find that a sole proprietorship is plenty for you. But if you plan to expand and have a large business, a corporation may be best to keep you safe.
Picking out the entity that is right for you does take some time and planning. It is best to research all of the options before making a decision. And if you do want to change this later on, such as when the business grows and changes, this is possible as well as long as you fill out the right paperwork in advance. Your tax professional will be able to help you out with this and ensure that you are getting all set up for your new business.
A tax professional is one of the best tools that you can have when it comes to starting out your new business. They are going to be able to answer your questions, find the best deductions, and just help you out quite a bit. When you are ready to get started on your business and need help, make sure to contact a tax professional in your area right away.
Margaret Tabb