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A structure permitted by state statute is a Limited Liability Company (LLC). Articles of organization must be submitted to the state’s secretary of state’s office in order to create an LLC. In its state, an LLC must be distinct and no more than one LLC in existence in the same state may have the same name. An LLC may be regarded as a corporation or a partnership for federal tax purposes, or it may be disregarded as a separate legal entity from its owner. An LLC may consist of one member (single member) or two or more members (multi- member). There is no limit to the number of members in an LLC. Individuals, businesses, other LLCs, or foreign entities may be members of an LLC.

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A business with just one owner that is neither incorporated nor registered as a Limited Liability Company (LLC) with the state is known as a Sole Proprietorship. An independent contractor or self- employed person can operate as a Sole Proprietor. All company income and costs are reported by self-employed persons, or sole proprietors, on their individual tax returns (Form 1040, U.S. Individual Income Tax Return, Schedule C, E, or F). Employers may or may not be part of a Sole Proprietorship.

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An organization that is set up and run for one or more of the objectives specified in Internal Revenue Code Section 501 (a) is known as a Non-Profit Organization. An organization that is founded and run for charitable or socially conscious goals as opposed to financial gain is known as a Non-Profit Organization. Religious, scientific, humanitarian, educational, literary, health, and animal welfare objectives can all be served by a Non- Profit Organization. Tax-exempt status is provided to Non-Profit Organizations in the United States. Generally speaking, contributions to Non-Profit Organizations are tax deductible, and the Non-Profit Organization themselves do not owe taxes on the money they receive from gifts or from other forms of fundraising.

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Every kind of Trust, such as receiverships, irrevocable trusts, revocable trusts, conservatorships, custodianships, and guardianships. A fiduciary arrangement known as a Trust permits a trustee, or third party, to hold assets on behalf of one or more beneficiaries. Trusts come in a variety of configurations and can dictate the precise manner and timing of the transfer of assets to the beneficiaries. Your beneficiaries may receive access to these assets sooner than they may to assets bequeathed through a will because Trusts typically avoid probate. Furthermore, if it’s an irrevocable trust, it might not be included in your taxable estate, which means that less taxes might be owed when you pass away.

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A corporation is an individual or group of individuals that form a legal entity by submitting articles of incorporation to the secretary of state of the state, which bestows upon it a range of legal rights, benefits, and obligations. A legally allowed domestic corporation that elects to choose this status by using Form 2553 (Election by a Small Business Corporation) is known as an S- Corporation. This allows the corporation to avoid paying taxes twice: once to its shareholders and once to the corporation itself. S-Corporations are typically free from federal income tax, with the exception of some capital gains and passive income. A partnership or sole proprietor is not the same as a S- Corporation.

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A corporation is a company created under law, with certain legal rights, obligations, and powers granted by a charter. An individual or group of people may form a company by obtaining a charter from the secretary of state of the state. A corporation has an endless lifespan and becomes an independent entity upon formation. If they so choose, C- Corporations are able to pay corporate taxes on earnings prior to disbursing dividends to their shareholders. The dividends that each individual shareholder receives are then liable to personal income taxes.

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