If you are starting your own business, one of the first things you will need to decide is how you will organize it. The structure that will work best for your business depends on your business’s needs for protection from liability and tax advantages. The most common types of business structures include sole proprietorships, partnerships, LLCs, corporations, and nonprofits. A Las Vegas business lawyer might suggest the type of structure that would work best for his or her client’s business.
Sole Proprietorships and Partnerships
Sole proprietorships are businesses that are run by one person. This structure is the simplest one. Business owners do not have to register sole proprietorships with the state, and they are formed as soon as the owners begin doing business (though state business licenses are often needed). Partnerships are like sole proprietorships except that they are owned by more than one person. They also are established when the partners begin doing business together and do not require registration with the state other than to secure necessary business licenses. A major disadvantage with sole proprietorships and partnerships is that the owners have no protection from liability. If the business is sued, the owners are parties to the lawsuit and their the owner’s personal assets may be at stake. For these business types, owners report the business’s income on their personal tax returns instead of filing separate returns for the businesses.
LLCs and Corporations
LLCs and corporations both provide protection from liability in the event that the businesses are sued. A limited liability corporation is registered with the state. by filing documents. This structure prevents business owners from being held liable for judgments and business debts. Owners of LLCs report the income from the business on their personal tax returns. Corporations are separate tax and legal entities. They provide protection from liability and pay taxes themselves. Owners pay taxes on the salaries, bonuses and other compensation they derive from the business. provide multiple options for handling taxes.
Nonprofits are corporations that are formed for religious, charitable, educational, scientific, or literary purposes. They can solicit funds from private and public sources through donations and grants. They are not taxed on the money received for their nonprofit purposes.