How to Choose a Business Structure
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What Is a Business Structure?
Why Do You Need a Business Structure?
Common Types of Businesses
Sole Proprietorships and Partnerships
Other Corporation Types
C corp. This type of corporation can make a profit, be taxed, and be held liable, meaning that its owners cannot be held liable. C corps offer owners the most protection, but they also cost more than other business structures to form and require more recordkeeping. Other drawbacks: C corps must pay income tax on profits, and profits may be taxed both when the corporation pays income tax and when shareholders pay taxes on dividends. B corp. Also called benefit corporations, these entities are taxed just like C corps but are different in terms of their purposes, transparency, and accountability, A B corp has some kind of purpose for the public benefit, and the shareholders hold it responsible for achieving this as well as for making profits. The state where the corporation operates may require proof that it’s benefiting the public, as well. This business structure is available in most states but not all. Close corporation. These are similar to B corps, but have less traditional, less formal structures. They may be run by a small group of shareholders without any board of directors, and they’re usually barred from public trading. Nonprofit. These are organizations dedicated to benefiting the public in some way--by promoting charity, religion, political rights, health, education, the arts, science, or some other cause. The organization can file to be exempt from taxes and must follow certain rules in addition to the usual corporation rules when it comes to using any profits it may make.
What Type of Business Should You Form?
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