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What are some common types of business structures?

| Jan 21, 2021 | Business Formation & Planning |

When starting a business in Fayetteville, one of the first tasks you will have to do is to select a business structure. There are a variety of business structures a new business owner has to choose from. The following is a brief overview of some of these structures.

Sole proprietorship

If you are going into business for yourself and you are the sole owner of your company, you may decide on a simple sole proprietorship. This is the default business structure if you are the only owner of your business and no other structure is chosen. A sole proprietorship is not a separate business entity, meaning that you will be personally liable for the debts and actions of your business.

Partnership

If you and one or more others decide to go into business together as co-owners, one of the simplest structures you can choose is a partnership. You may choose either a limited partnership or a limited liability partnership.

In a limited partnership, one partner has unlimited liability, and the other partners have limited liability. The person with unlimited liability generally pays self-employment taxes, while the partners with limited liability generally have limited control over the business, as per the terms of the partnership agreement.

In a limited liability partnership, all partners have limited liability. This means they are protected from the actions of their co-partners and they are protected from being personally liable for the business’ debts.

Limited liability company

A limited liability company may be owned by one or more persons. It creates a separate business entity, meaning the owners are not personally liable for the debts and actions of the business if the LLC goes bankrupt or is sued. Business profits and losses are not taxed at the corporate level, but the owners of the LLC must pay self-employment taxes.

Learn more about business structures

No two businesses are alike, so it is important to choose a business structure that best meets your business’ needs. Our firm’s website has more information on starting a business that new business owners may find useful.

 

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