Each form of business has its advantages and disadvantages as well as tax consequences of which you should be aware. You must decide which of these structures best suits your business objectives and needs.
This business structure protects the owner’s personal assets from financial liability and provides some protection against personal liability. There are situations where an LLC owner can still be held personally responsible, such as if he intentionally does something fraudulent, reckless or illegal, or if she fails to adequately separate the activities of the LLC from her personal affairs.
You will need to file paperwork with the state if you want to adopt this business structure, and you will need to pay fees that usually range from $100 to $800 particularly if you use an attorney to file the documents.
A sole proprietorship is an unincorporated business with one owner who pays personal income tax on profits from the business. With little government regulation, they are the simplest business to set up or take apart, making them popular among individual self-contractors or business owners. The disadvantage of a sole proprietorship is obtaining funding specifically through established channels, such as equity (selling shares) and obtaining bank loans. As a business grows it often transitions to another form of business.
A partnership is a structure appropriate to use if you are not going to be the sole owner of your new business. It is an arrangement by which partners conducting a business jointly have unlimited liability, which means their personal assets are liable to the partnership’s obligations.
Since all partners have unlimited liability, even innocent partners can be held responsible when another partner commits inappropriate or illegal actions.
LLPs are most commonly used by professionals such as doctors and lawyers. The LLP structure protects each partner’s personal assets and each partner from debts or liability incurred by the other partners. Although the general structure of LLP can vary, each individual is liable only to the extent of their invested capital. LLPs must file information returns with the IRS, but they do not file separate tax returns. For tax purposes, the partnership’s profits or losses pass through to its owners, so a partnership’s income is taxed at the individual level. LLPs are also state entities and must file paperwork and pay fees similar to those involved in establishing an LLC.
S corporations are pass-through entities, meaning that their income, losses, deductions and credits pass through the company and become the direct responsibility of the company’s shareholders. The shareholders report these items on their personal income tax returns, thus S corps avoid the income double taxation issue. Like the LLC, the corporate structure distinguishes the business entity from its owner and can reduce liability. However, Sub-Chapter S Corporations are considered more complicated to run because of tax, accounting, record keeping and paperwork requirements. Unless you want to have shareholders or your potential clients will only do business with a corporation, it may not be logical to establish your business as a Sub-Chapter S Corporation from the start.
Make an appointment with the City of Minden’s Economic Development Department to discuss your business plans.
FEDERAL REQUIREMENTS FOR NEW BUSINESSES
When starting any for-profit business, it is important to be aware of what is expected from the IRS as part of the planning process. Click on the link below for IRS Website. Click on Link to IRS Website
Whether you are beginning a new enterprise, relocating your existing business, or are an outside company planning to conduct routine business within the city limits you will need an occupational license. Click here to start the process: Occupational Privilege License
Food Service/Restaurants must contact the Webster Parish Department of Health and Hospitals at (318) 371-3044. You are also encouraged to visit the department’s website: Click Here for Health Dept.
Developing Commercial Property, here are the steps when developing commercial property in the City of Minden. To start this process you can contact the Zoning & Planning Department at 377-2144. Ext. 215.