Business Structure Of The Field On Entrepreneurship

1613 Words7 Pages
Business Structure
When going into the field on entrepreneurship it is important to decide which form of business to use. Determining what form of business you’re going to operate under is important because it will correlate to what tax return form you’ll have to file. There are five types of different forms that said entrepreneur can choose to operate under which are: sole proprietorship, partnerships, corporations, S corporations, and a limited liability company (LLC). A sole proprietorship is someone who owns an unincorporated business by himself or herself, and it’s the simplest business under which one can operate a business. The next form of business is a partnership which is simply two or more persons who join to carry on a trade
…show more content…
To be considered an S Corp, you must first charter a business as a corporation in the state where it is headquartered. The list below will break down what qualifies for S Corporation status:
•Be a domestic corporation
•Have only allowable shareholders ◦May be individuals, certain trusts, and estates and
◦May not be partnerships, corporations or non-resident alien shareholders
May not be individuals, certain trusts, and estates
•Have no more than 100 shareholders
•Have only one class of stock
•Not be an ineligible corporation (i.e. certain financial institutions, insurance companies, and domestic international sales corporations).
The last form of business structure to operate under is a Limited Liability Company (LLC). LLC’s are commonly referred to as the hybrid of business structures because they provide limited liability features of the corporation, they are tax efficient, and operate cohesively with partnerships. When forming an LLC there are three rules that must be followed which are: 1) it has to be different from already existing LLC’s in said state. 2) It has to indicate that it is in fact an LLC. 3) it is illegal to incorporate restricted words according to the state that the entrepreneur intends to operate in.
A limited liability company is a type of company that has the dividends benefit of a partnership and the minimal liability benefits of a corporation. LLC’s are mainly beneficial to the
Get Access