| A business ownership should be structured according | | | | owners do not use their personal tax returns to pay |
| to the needs of the owners and potentially liability that | | | | tax on corporate profits because the corporation itself |
| the business could incur. The different types of | | | | pays these taxes. Any money drawn from the |
| business ownership are | | | | corporation in the form of salaries, bonuses, etc is paid |
| Sole proprietorship | | | | by the owners in their personal income tax returns. |
| Partnership | | | | Limited Liability Corporations |
| Limited Liability Corporation | | | | Limited Liability Corporations provide their owners just |
| Corporation (for profit) | | | | that, limited personal liability for business debts and |
| Nonprofit corporation | | | | claims. However, LLCs resemble partnerships when it |
| Limited Partnerships | | | | comes to taxes. The owners of an LLC pay taxes on |
| This type of business organization is costly and | | | | their shares of the business income on their personal |
| complicated to prepare. It is not recommended for the | | | | tax returns. This type of organization is good for |
| average small business owner. Limited partnerships | | | | business owners who either |
| are usually created by one person or company who | | | | Could be sued by customers |
| solicits investments from others. The people who | | | | Run the risk of piling up a lot of debt |
| invest are considered the limited partners. The general | | | | Have substantial personal assets they want to protect |
| partner is in charge of the business's everyday | | | | Sole Proprietorship and Partnership |
| operations. They are personally liable for business | | | | A sole proprietorship, or partnership, is the ideal |
| dents. Limited partners have little control over daily | | | | ownership structure for an up and coming business or |
| business decisions or operations. Because of this they | | | | the average small business. They do not have to be |
| are not personally liable for business debts or claims. | | | | registered with the state and go into effect as soon |
| A Corporation | | | | as one person goes into business with themselves or |
| The most significant benefit to forming a corporation is | | | | two or more people go into business together. Any |
| that it limits the owners' personal liability for business | | | | business income is reported on the owner's personal |
| dents and any court judgments against the business. A | | | | income taxes. They are also personally liable for any |
| corporation is an independent legal and tax entity. This | | | | business debts or court decisions against the business. |
| sets it apart from other types of businesses. The | | | | |