name four different types of legal requirements of a business and explain how it will affect your proposed business
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Answer:
LLC: A LLC, or Limited Liability Company, protects you from personal liability under most circumstances. This means that if your business is sued or if it declares bankruptcy, your personal assets including your home and vehicle won’t be at risk. With an LLC you’ll be able to file your business income as part of your personal income taxes, but you will likely need to pay self-employment tax.
Corporation: A corporation, or C corp, is a company that is legally a separate entity from its owner or owners. Corporations offer the greatest level of personal protection from liability out of all business structures. However, they’re more expensive and complicated to form. Corporations file separate income taxes on their profits.
Do some research to find out whether your startup needs a state tax ID number. You’ll only need one if the state you operate in collects taxes from businesses. Since tax obligations vary from state to state, it’s best to visit your own state’s website and check the local laws related to your income and employment tax obligations.
To ensure you’ve covered all your legal responsibilities as a new business, it’s a good idea to consult professionals for advice. Consider sitting down separately with both a lawyer and an accountant to make sure that your company is covered from a legal and a financial standpoint before opening for business.