Business Formation

A sole proprietorship is a business opened under the name of one individual or married couple. The sole proprietorship is not a separate entity, and all taxes are filed on a personal tax return. There are many advantages to starting a sole proprietorship. You can start a sole proprietorship with as little as $20 because in most states this is the most you will pay for a business permit. Other more expensive filings are not needed, so you can save the money you would spend on a lawyer on your business. In a sole proprietorship, the owner keeps all the profits. You do not have to share profits with investors as you would with a corporation. As opposed to a corporation, you can use fund from your business for personal use. In business forms where there are partners or investors, you have to get permission to take money out of the company for personal expenditures. The owner is the decision maker in a proprietorship, so you do not have to clear decisions with a board of directors or a partner in a partnership. If your business fails, all losses are your own, and you don't have the headache of paying back business partners. You will also have no lawsuits from angry investors as you would have with a corporation.

An S corporation can have no more than 75 shareholders. None of the shareholders can be nonresident aliens.

None of the shareholders can be nonresident aliens.

A LLC similar to S Corporations, Limited partnerships and Sole Proprietorships report theor profit or losses on there personal tax returns.

No. 100% of the health insurance premiums paid for yourself, your spouse and your dependents are claimed as an adjustment to income on Form 1040 line 29.

No. There are no citizen requirements for LLC's, Limited partnerships, Sole Proprietorships or S Corporations. There are citizen requirements for S Corporations.

No. There is no limit on the number of owners (members) for a LLC or a Limited partnership or a C Corporation. There are limits for S Corporations and Sole Proprietorships.

A single member LLC files as a disregarded entity on a Schedule C. It does not file as a Form 1065 Partnership tax return.

Just as in a sole proprietorship, partners are still responsible for unlimited liability, both personal and business. Therefore, everything you own is at risk. Also, you cannot make certain important business decisions without the agreement of the partner. A general partnership offers few tax benefits to business owners.