When beginning a business, you must decide what form of business entity to establish. Your form of business determines not only which income tax return form you have to file, but also how the company is managed, how personal liability may be sheltered, and the ease of operation. The most common forms of business are the sole proprietorship, partnership, corporation, and S corporation. A Limited Liability Company (LLC) is a relatively new business structure allowed by state statute. Legal and tax considerations enter into selecting a business structure.
PRACTICE TIP: Consult an attorney and an accountant as to what structure is the best for your business with regard to tax treatment, ease of operation, and liability.
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