Steps to launching a business: choose a structure A business becomes a ‘legal entity’ meaning that it can own property, can hold bank accounts, and pays taxes almost exactly as if it were a living citizen truck stop business plan the Commonwealth of Virginia. There are several types, however, each with its own benefits and limitations. Business structures are like classes of cars.
The ‘right choice’ for you is truly dependant on your needs. Get to know the types and make a good decision for yourself. This decision impacts taxes, the relationships between owners, and, legal liability. Sole Proprietorships are usually owned by a single person or a couple. You’re personally liable for all business debts, can freely transfer all or part of the business, and for taxes, you can report profit or loss as personal income.
You have limited legal liability like a full corporation however, for taxes they’re more like Sole Proprietorships or Partnerships. General Partnerships let you share profit, loss, and managerial duties among the partners, and each is personally liable for any debt entirely. Corporations” are complex structures with more startup cost. They are owned through stock and have more complex licensing, taxation, and regulation requirements. They have to follow formalities like issuing stock certificates, holding annual meetings and keeping minutes, electing directors, etc. C-Corporations are distinct legal entities, taxed separately from their owners and are generally not favored to own assets that substantially appreciate in value.