Business Entity

Types of Business Entity

Every individual has to one day to be self-employed and work themselves. Choosing the right business entity is one of the most crucial decisions that you have to make at the starting age of your company. This decision impacts the time it takes for your business to grow or how much will pay in taxes in your state. Also, it is important about the liability you face in the course of doing business and how you could increase cash flow for your business. Contact Bellaire Tax Services to Start your business today!

Do not forget these factors when considering to choose the right business entity for your company:

  • How liabilities from the business will impact your personal and business assets.
  • Taxation.
  • Attracting the right buyers.
  • Possession.
  • The fee of operations.

There can be many sorts of business entities you can pick out from, they’ve their advantages and drawbacks. It’s critical that one weighs the advantages against the dangers as they apply to the business of hobby.

Allow Bellaire Tax Services help you with your business formation. We research your day to day operation and advise you the best decision you can make in the long run. Call us today and become your own boss.

Sole Proprietorship

  • This is the simplest entity, usually, it’s about one individual who owns and runs the business. This business entity can be operated under the owner’s name or a fictitious name. Let’s take a look at the major attributes of sole proprietorship: 
  • Taxation 

Because the sole proprietorship is about only one individual, the taxation is very simple. The owner and the business are all the same, therefore both the income and expenses of the business are recorded on the owner’s personal tax return. 

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Partnership

  • The partnership is a type of business entity where two or more individuals agree to share the profits and debts of a business enterprise. 
  • Under partnership entity, all the partners are responsible for the liability and the debts incurred from the business operations. A lot of different arrangements can be in play: partners might agree to share profits and debts equally or by percentage. 
  • Partnership enjoys favorable taxation as the corporation does not pay income tax rather this taxation is passed over to the owner’s personal tax returns.
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C Corporation

  • C-corporation is a type of business entity owned by shareholders who elect a board of directors to run the business. Owners of C-corporation are not liable for the debts and losses of the company and can not be sued personally for the company’s misfortune. 

 

 

 

  • Many business owners seem to shy away from this entity because of double taxation but it has the advantage of the lower corporate tax return on profits reinvested on the
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S Corporation

  • S-Corporation is a type of corporation that gives its owners limited liability protection. It’s more attractive to business owners than the standard corporation because of its tax benefits. Shareholders are only liable to pay for tax on their personal income. 
  • S-Corporation is expected to have at least 75 shareholders before it can be considered eligible to apply for subchapter S. 
  • One major disadvantage of S-corporation is that only the US citizens and residents can own own it.
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Non-Profit

  • The non-profit or non-business entity is an organization which the main purpose of formation is not to make a profit. These organizations are mostly for social causes or charitable. We can say that their purpose is for public benefits. 
  • Because of this good purpose, non-profit organizations are exempted from taxation, and their directors and employees are protected against the company’s liability. 
  • Regardless of its name, non-profit organizations may generate profit. This
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