How Do I Know Which Entity Type Is Right for Me?

Deciding to start your business is a big and exciting choice. As you move towards opening your company, you may be wondering what type of business you should start. The legal structure of your business should be determined because of your unique needs. When forming your business, you have a few types of entities from which to choose. Each entity has its benefits and drawbacks. There’s not one structure that’s right for every business. Make sure you choose one that fits your needs.

Sole Proprietorship

This is the easiest type of business to form and operate. All your profits and losses will be reported on your personal tax return. However, despite the convenience of operating a sole proprietorship, your business will be directly tied to your assets. You will also need to pay self-employment taxes.

Partnership

If you go into business with someone else, the default entity type is a general partnership. Similar to a sole proprietorship, the personal assets of the partners will be tied to the business.

Limited Liability Company

A limited liability company (LLC) is the hybrid of a partnership and a corporation. Running an LLC means that the business profits and losses are passed through to the owners. It also shields you from personal liability.

Corporation

If your main concern is protecting your assets and having a completely separate entity from you, you may consider starting a corporation. However, there is more effort and complication to starting and running a corporation.

No matter what entity type you choose, you’ll need to apply for a Louisiana tax ID number. With IRS-EIN-Tax-ID.com, it’s easy. You can apply for your number in minutes and check TIN number status at any time. If you need assistance starting your business or getting a tax ID number for it, you can contact IRS EIN Tax ID Filing Service and its knowledgeable and friendly customer service team.

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