Types of Entities That You Can Use in Starting or Changing a Business

 

You may be wondering on the type of entity to use when you are starting any business or changing that business that is already existing. Depending on the type of entity that you will choose, you will be able to make a very big difference in terms of the taxes that you will pay and how your assets will be protected. This article has outlined some of the entities you can use.

 

First, you can make use of an S corporation which has already been elected and it can be taxed like an entity that flows through. With this kind of entity, you will be liable to taxation just as a shareholder and so, it will only be done at the individual level. You will never be taxed at this level then get taxed again at your corporate level like it is done in other entities. At your corporate level, you will not experience any taxation that will be levied on your income that is federal. For this reason, most of the stakeholders in businesses are now making use of this entity as they are sure that they will always be taxed just once. One problem with this kind of entity is that it has a maximum number of owners and that is hundred.

 

Second, there is this company which is subjected to taxation both at the personal level as well as the level that is corporate. At that level that is corporate, you will always have your income that is federal being taxed. This type of entity has not gained popularity among business owners as it requires one to be taxed more than just once like all other entities.

 

You can as well decide to use the entity of limited liability companies in starting or changing your business. This is that type of entity which has already been elected to taxation just as an entity that is a flow through. Unlike the S corporate, the limited liability companies has no restriction on the maximum number of members to claim ownership. In this kind of entity, there is room for being so many owners or stakeholders if that what it takes to be successful. Know what is an s corporation here!

 

The first step in coming up with your corporation will be to fill in those forms that will help you in creating an entity that is legal and very independent. You will have to brand it its personal name, the purpose of the business as well as the identity of the tax. Check out this website at https://en.wikipedia.org/wiki/Business for more info about business.