What are the various types of Business Organizations – Structures
and which is best?
Reference - Please check with us on latest AB 1083 Requirements
Warner Pacific 411 Broker ONLY
IRS Small Biz and Self Employed Tax Center
Child, Related Pages & Site Map
- Business Structure. An early choice to make is to decide on the type of structure for the business. The most common types are sole proprietor, partnership and corporation. The type of business chosen will determine which tax forms to file.
- Business Taxes. There are four general types of business taxes. They are income tax, self-employment tax, employment tax and excise tax. In most cases, the types of tax a business pays depends on the type of business structure set up. Taxpayers may need to make estimated tax payments. If so, use IRS Direct Pay to make them. It’s the fast, easy and secure way to pay from a checking or savings account.
- Employer Identification Number (EIN). Generally, businesses may need to get an EIN for federal tax purposes. Search “EIN” on IRS.gov to find out if the number is necessary. If needed, it’s easy to apply for it online.
- Accounting Method. An accounting method is a set of rules used to determine when to report income and expenses. Taxpayers must use a consistent method. The two most common are the cash and accrual methods:
- Under the cash method, taxpayers normally report income and deduct expenses in the year that they receive or pay them.
- Under the accrual method, taxpayers generally report income and deduct expenses in the year that they earn or incur them. This is true even if they get the income or pay the expense in a later year.
Resources for Starting
Starting & Managing a business is a daunting and detailed process. Get started with our step by step business plan roadmap. >>Read more
Follow these 10 steps to make sure all your start up needs are covered. >>Read more
Resources for Managing
tips to lead and empower your employees. >>Read more
SCORE Business Valuation 101
Qualified Joint Venture
Video on how much coverage for death protection you need
Steve Shorr Explanation of Participation Rules Pre - ACA
Car and Truck Expenses
Legal and Professional Fees
Travel and Meals
Business Use of Your Home
Other Expenses You Can Deduct
Expenses You Cannot Deduct
CA Franchise Tax Board’s Guide & IRS to:
Common Forms of Ownership
- Choose a business structure. The form of business determines which income tax return a business taxpayer needs to file. The most common business structures are:
- Sole proprietorship: An unincorporated business owned by an individual. There’s no distinction between the taxpayer and their business.
- Partnership: An unincorporated business with ownership shared between two or more people.
- Corporation: Also known as a C corporation. It’s a separate entity owned by shareholders.
- S Corporation: A corporation that elects to pass corporate income, losses, deductions, and credits through to the shareholders.
- Limited Liability Company: A business structure allowed by state statute.
- Choose a tax year. A tax year is an annual accounting period for keeping records and reporting income and expenses. A new business owner must choose either:
- Calendar year: 12 consecutive months beginning January 1 and ending December 31.
- Fiscal year: 12 consecutive months ending on the last day of any month except December.
- Apply for an employer identification number. An EIN is also called a federal tax identification number. It’s used to identify a business. Most businesses need an EIN.
- Have all employees complete these forms:
- Pay business taxes. The form of business determines what taxes must be paid and how to pay them.
Taxpayers interested in starting a business can find information for some industries on the Industries/Professions Tax Centers webpage. Each state has additional requirements for starting and operating a business. Prospective business owners should visit their state's website for info about state requirements.
- Small Business Admiration’s 10 steps to start your business.