One important decision a business must face is a legal structure for the business. The type of structure selected by the business will affect how earnings from the business are taxed and the legal and financial liability of the owner for the activity of the business.
Forms of business ownership fall into four categories:
? Sole proprietorship
? Partnership
? Corporation
? S corporation
In addition, most states have adopted the concept of Limited Liability Corporations, or LLC, which is a combination of the characteristics of a partnership, corporation, and S corporation. Because qualifying as an LLC varies across states, businesses interested in LLCs should investigate locally.
For more information, see the Small Business Administration's related Web site: SBA's Small Business Planner
