Common Business Forms
- Tia Puryear
- Mar 22, 2024
- 2 min read
There are several common forms of businesses, each with its own structure, benefits, and considerations. Here are some rof the most common forms.
1. Sole Proprietorships are owned and operated by a single individual. However, the owner has unlimited personal liability for business debts. Business income is reported on the owner's personal tax return.
2. Partnerships are formed by two or more individuals who share management, profits and liabilities. Each partner reports their share of the partnership net profit or loss on their personal tax return.
3. A corporation is a separate legal entity owned by shareholders. Shareholders have limited liability, protecting personal assets. Corporations are subject to corporate tax rates, and dividends may be taxed at individual rates.
4. An S Corporation is a variation of the standard corporation. Shareholders have limited liability. The S corporation allows income or losses to be passed through to individual tax returns, similar to a partnership.
5. Limited Liability Company (LLC), similar to a corporation, owners have limited personal liability for the debts and actions of the LLC. LLCs can choose between pass-through taxation or be taxed as a corporation.
Choosing the right business form is a crucial step that depends on factors such as the nature of the business, liability protection, and tax implications.
Consult with a legal and financial professional to ensure that the chosen structure aligns with the business's goals and needs.
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If you can't file your tax return by the April 15, 2024, deadline, request an extension.
An extension gives you until October 15, 2024, to submit a complete return.
You can use IRS Free File at IRS.gov/freefile to request an automatic filing extension or file Form 4868, Application for Automatic Extension of Time to File.
Remember, an extension to file is not an extension to pay taxes. If you owe taxes, you should pay them before the tax deadline to avoid potential penalties and interest on the amount owed.
Got any tax questions? Drop your questions in the comments below.
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Get in touch with us today!
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