Learn how to start a business in Houston
In this paragraph, we are going to show you the types of business you can start. if you like to learn how to start a business in Houston contact us at Green Tree Tax. Whether its Individual tax preparation services or company taxes, we know them all. Choosing the right entity type for your business is the most important part of a company.
Types of business entities
Before starting it is important decisions to pick the right entity type when starting your new business. Even so, this decision affects the amount of time it takes to have your business registered. Also, the tax category which your company will be placed can change too. Above all, the liability you face while owning the business and how you can raise money for the business will effect.
how to start a business in Houston to know list:
- How liabilities from the company affect your assets.
- Taxation
- Attracting the right investors.
- Ownership.
- The cost of operations.
There are many types of business entities one can choose from, they have their advantages and disadvantages. One must weigh the advantages against the disadvantages as they apply to the business of interest.
Let’s take a look at the different types of business entities one can choose from.
sole proprietorship company
This is the simplest entity, usually, it is one individual who owns and runs the business. This business entity can operate under the owner’s name or a fictitious name. Let’s take a look at the major attributes of a sole proprietorship:
- Taxation
Because the sole proprietorship is about only one individual, the taxation is very simple. The owner and the business are all the same, therefore both the income and expenses of the business are recorded on the owner’s tax return.
Partnership Company
A partnership company is a type of business where two or more individuals agree to share the profits and debts of a business.
Under the partnership rule, all the partners are responsible for the liability and the debts from the business operations. A lot of different arrangements can be in play: partners might agree to share profits and debts equally or by percentage.
Partnership enjoys favorable taxation. Unlike a corporation does not pay income tax rather this taxation is passed over to the owner’s income tax returns.
L.L.C or a Limited Liability Company
LLC stands for Limited Liability Company. Such a business entity combines the taxation of partnership with the limited liability of a corporation. LLC protects owners from liability of the company. In other words, all the business’s assets belong to the LLC. In this case, they are separate from the owner’s assets.
LLC is actually very popular among business owners. The owners can choose the taxation category that benefits them. Although, by default, LLC is federally taxed as a partnership entity or sole proprietorship.
Corporations
C-corporation is a type of business entity which is owned by its shareholders. Shareholders elect a board of directors to run the business. Owners of C-corporation are not liable for the debts and losses of the company. Additionally, directors are not personally responsible for the company’s debt.
Many business owners shy away from this entity, because of double taxation. Although, it has the advantage of the lower corporate income tax on profits when reinvesting the profits in the company.
S-Corporation
S-Corporation is a type of corporation that gives its owners limited liability protection. It’s more attractive to business owners than the standard corporation, because of its tax benefits. Shareholders are only liable to pay for tax on the income they withdraw.
Besides, S-corporation is only for US citizens and residents.
Non Profit Organization
The non-profit or non-business entity is an organization in which the main purpose of formation is not to make a profit. These organizations are charitable. We can say that their purpose is for public benefits.
Because of this good purpose, non-profit organizations are exempt from taxation. Generally, directors and employees are not liable for the company’s liability.
If you like to know how to start a business in Houston contact Green Tree Tax
At Green Tree Tax we are experts in obtaining your EIN or forming your business type. Remember to contact us in case you have any questions, or need to start a business. We are a major Houston tax preparation company.