What is a business organization? By definition, it’s an institution created to engage in commercial enterprise. There are different types of business organizational structures, which are determined by factors including taxes, paperwork, how you raise working capital and investment, as well as your amount of personal liability.
An organization can become an S corporation by filing IRS Form 2553 , also known as the Election by a Small Business Corporation form, no later than March 15 of that year. Many states require owners to pay annual reporting fees, franchise taxes and other miscellaneous fees.
Sole Proprietorship. A sole proprietorship is a business owned by 1 person. It’s a business with no separate existence from the owner, as all income and losses are taxed against their personal income tax return. Compared to other forms of business ownership, this option requires the fewest documents to complete and file.
A corporation operates as a separate, legal body led by an elected board of directors. The board is elected by shareholders, otherwise known as the owners of the corporation. Depending on the size of the company, one person can simultaneously be an officer, director and shareholder. Aside from the ability to vote and a few other personal rights, corporations have the same legal rights of an individual.
A general partnership features many benefits, including the flexibility to form the business as partners see fit.
A partnership is a type of business organization between 2 or more people. As partners, these individuals share management of the business and any profits and losses.
Because a sole proprietorship ownership structure doesn’t require you to separate the company from yourself as an individual, you could choose to use your name as the name of your business.