Business Structure Advice

In: Business and Management

Submitted By toriken
Words 507
Pages 3
Business Structure Advice
FIN/570
Arnold Harvey
Victoria Holmes
4/20/15

Dear John Owner, thank you for contacting me about wanting to start up your business. Here is what you will first need to know. Step one is identifying which business structure you plan on setting up. The choices are sole proprietorship, partnership, LLP (limited liability partnership) and corporation. Since you asked to be informed of each before making a decision, I will give you a small break down and its tax advantages and disadvantages. Sole proprietorship is a company owned by you or the person planning to start the business. The major pro is that you will be your own boss. The major con is that you as the owner are responsible for everything. Tax wise, the taxes are claimed on your individual taxes. The good thing here is there may be a tax break for your first start up. The bad is that it will be included in your income and if you did not pay enough taxes, then you will end up owing the IRS money. Only decide this option if you are sure you want to only work for and by yourself. Partnerships are ideal if you are looking to split the company down the middle. It is easier on you because you can share the responsibilities of the company. You can decide to form and LLP, which gives a partner limited liability if anything should go wrong within the company. The tax situation is still the same as a sole proprietorship. Each partner must file for the company on their personal taxes. Corporations are their own separate entity and are owned by the shareholders. The shareholders elect their board members to help run the corporation. Starting a corporation is the hardest because you will need plenty of investors and someone who is willing to back your company. If the shareholders do not see any staying power, it will be difficult to start this type of business. As far as the taxes are…...

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