Your Bookkeeping Company
Your Bookkeeping Company – Small business is big business in the U.S. As of June of this year, Florida has 1,633,574 small businesses, with 444, 0666 of them having employees.
If a small business is in your near future too, it’s important you understand the various business structures since they all have their own legal and tax implications. Your Bookkeeping Department in Miami is here to help you understand the differences between corporations, partnerships, proprietorships and other structures. Keep reading this small business blog so you can make an informed decision when setting up your own company. Should you need any advice or help setting up your small business, contact Manal Oliver at 305.868.7620. The Miami Beach bookkeeper work with many local businesses, especially law firms, dental offices and medical clinics, as well as with out-of-state companies thanks to outsourced bookkeeping.
What Is a Sole Proprietorship?
This type of small business is the most basic one to set up, where you’re the owner and responsible for all assets, liabilities and losses. Your company under a sole proprietorship is unincorporated, meaning there’s no distinction between you the individual and the business itself. As a sole proprietor, this Miami Beach bookkeeping company reminds you that you’re still paying taxes, however the business itself is not taxed separately.
What is a Corporation?
Also referred to as a C-Corp is an independent legal entity owned by shareholders. This Miami Beach bookkeeping company reminds you that that means it’s the corporation itself that is held legally liable for all activities, NOT the shareholders. So corporations are taxed on their profits, sometimes even taxes twice; at first when they turn a profit and then again when dividends are paid to shareholders on their own personal tax returns. However, corporations typically have a lower corporate tax rate than a personal income tax rate.
What Is a partnership?
This type of small business includes two or more partners in its ownership. Each partner contributes to all parts of the business including property, labor, capital, skill and so on. Your Miami Beach Bookkeeping company reminds you that all partners also share in profits and losses. You’ll have to register the business with the IRS in order to get a tax ID number and file an annual financial return to report income, deductions, gains and losses, but the business itself doesn’t pay income tax. Instead, partners include their respective share of partnership’s income or loss on their own personal tax returns.
What Is a Limited Liability Company?
Legally, a limited liability company is part corporation part partnership, in that you can take advantage of the limited liability of a corporation, but enjoy the tax efficiencies and operational flexibility of a partnership. The owners of this small business type of company are called members and there’s no limit to how many members a limited liability company can have. This Miami Beach bookkeeping company reminds you that Florida allows even one-member LLCs. An LLC isn’t taxed, instead all federal income taxes are passed onto the members and paid through their personal income tax. Since a limited liability company isn’t recognized as a separate tax entity, all LLCs have to file as a corporation, partnership or sole proprietorship tax return.
If you’re looking to file a small business, contact Your Miami Beach bookkeeping company for guidance.