What type of business entity should I choose?
When choosing a business entity in Massachusetts, you should consider a few factors. The type of entity you choose will determine how your business is taxed, how you are personally liable, and how much paperwork you need to do. The most common types of business entities in Massachusetts are sole proprietorship, partnership, corporation, and limited liability company (LLC). A sole proprietorship is the simplest business entity, as you alone own, manage, and are liable for the business. You are taxed on profits and losses, and must file additional paperwork with the state. A partnership is similar to a sole proprietorship, but with two or more people owning and managing the business. You are personally liable for the business and taxed on profits and losses, and must file additional paperwork with the state. A corporation is a separate legal entity, owned by shareholders. The corporation is responsible for the business and liable for its debts, and the shareholders are not personally liable. Taxes are paid at the corporate level and shareholders are taxed on their profits or dividends. This type of entity requires more paperwork and other forms of compliance. A limited liability company (LLC) combines aspects of both a corporation and a partnership, as it is a separate legal entity and the owners are not personally liable. An LLC is taxed as a partnership, and although there is more paperwork than a sole proprietorship or partnership, it is less than a corporation. Ultimately, the type of business entity you choose will depend on your needs, goals, and preferences. You should consult with a legal and financial advisor to determine the best option for your business.
Related FAQs
What is a board of directors?What type of business financing is available?
What type of business entity should I choose?
How do I form a sole proprietorship?
What is a limited liability partnership?
What is a corporate compliance officer?
What is venture capital financing?
How do I set up a non-profit organization?
What is a corporate seal?
How do I set up a business website?
Related Blog Posts
Understanding the Basics of Business Formation Law - July 31, 2023What You Need to Know Before Starting Your Business - August 7, 2023
The Financial and Legal Aspects of Starting a Business - August 14, 2023
Why It's Important to Have a Legal Guide When Forming Your Business - August 21, 2023
Navigating State and Federal Laws When Forming a Business - August 28, 2023