Types of Business Entity Formation in USMost business owners today have got involved in the process of setting up a proper legal entity fortheir business. This is understandable considering the probable difficulties of business entity formation,business law and the perceived high expenses that are involved in these processes. Business refers tothe continuity and there is an initiating point for an incessant procedure. This point gets initiated withincorporation. However, if you are an American citizen or a US resident, looking for business entityformation, then you can get the same incorporated under the following kinds:- ● Sole Proprietorships ● Partnership ● Limited Liability Company ● CorporationIf you are wondering how to go about it, then you can get in touch with eminent tax planning serviceproviders in US. They would offer all the necessary guidelines regarding business entity formation. Theabove mentioned four kinds are discussed below:-Sole ProprietorshipThis type of entity formation is also termed as a sole trader or proprietorship. It is owned and operatedby an individual and there’s no legal difference between the business and owner. It can be set up at areasonable cost, is simple to dissolve and usually have no tax planning. This is because the profits andlosses are a part of the individual owner’s income.PartnershipsThis type of business entity too can be formed at a reasonable price. Partnership business involvestwo or more people or any business entity sharing the profits and loss incurred equally. Every partnerinvolved in the business has joint responsibilities to the partnerships. Furthermore, any partner mightbe held responsible to pay off the total debts of partnership regardless of his participation in capitalcontribution, profit or losses.
Limited Liability Companies (LLCs)This is a highly flexible kind and can be used for multiple business types. The members involve can butdoes not need to have limited liability. They can choose to be taxed either as partners or corporations orcan also be disregarded for tax aspects like that of a sole proprietorship.CorporationsCorporations are slightly complex in comparison to the other business entity types. A new legal entity isset up by forming a corporation which is distinct from its owners. Hence, it depends on its shareholders.Depending on the state law, a corporate can be owned by a single person or can have one officer ordirector.Apart from guidance on business entity formation, tax planning companies in US also offers servicessuch as:- ● Registered Agency Service ● Application of EIN ● Maintenance of minute books and drafting of resolutions ● Business Licenses & permits ● Bylaws and Operating Agreements ● Certificates of Good standing ● Corporate & Compliance kits ● Registering a Business name ● Foreign Corporations for operations in multiple states ● Filing of Annual/Franchise tax ● TestimonialsA market review would show that majority of business operate as partnerships or sole proprietorshipand does not leverage other benefits that are available, in case they modified the legal format of theirbusiness. These benefits might involve essential elements such as limiting personal liability; improve tax
treatment or adding a professional touch to your business name by incorporating LLC or INC in the end.Read Also On: FBAR, US India Tax