When starting a new venture, there are many aspects that affect the type of business structure you should create. Providence Bookkeeping and Tax Services LLC will provide you with the pros and cons of each business structure and assist you with identifying the most advantageous type of business formation that best fits your business and tax needs. Options for business formation are:
Doing Business As (DBA)
A DBA is a fictitious business name that allows you or your company to do business under a different name. There are many reasons why business owners file a DBA, and they vary by business type.
General Partnership, Limited Partnership (LP) & Limited Liability Partnership (LLP)
When two or more people start a business, they form what is called a partnership. There are several types of partnerships, including general partnerships, limited partnerships, and limited liability partnerships.
Corporations (S & C)
Corporations can be formed as S- or C- corps and are generally selected based on number of employees and tax advantage, which is the primary difference between the two. C corporations are taxed as independent entities and the profit (or loss) for S corporations “passes through” to the individual tax returns of its shareholders.
Limited Liability Corporation (LLC)
A limited liability corporation is the simplest way to form a business to protect the personal assets of the owners. They can be owned by one or more people and are generally managed by its members. An LLC may choose to treat itself as an S corporation for tax purposes.
Non Profit Organization
A nonprofit organization uses money collected through various sources to further its mission of good deeds. The excess revenues are not “pass-through” to owners or investors and they choose to incorporate for these purposes, among other benefits.