A business is defined by Wikipedia as a commercial entity or agency engaged in commercial, agricultural, or other economic activity. A business may be entirely for-profit, or they may be primarily non-for-profit entities operating to meet a social objective or further an educational mission. They are public or private entities and may be operated by a singular individual, a corporation, partnership, joint-venture, or an unincorporated business entity. There are hundreds of thousands of different types of businesses. Many are seen in the newspapers, television, and online media.

The most common type of business is a corporation. These corporations are organized by a board of officers elected each year from the shareholders. The officers can be the CEO, the CFO, a general or a special officer, and one or more partners. At-home owners may incorporate by choosing a sole proprietorship, a corporation, a partnership, a Limited Liability Company (LLC), or a trust. All of these options have tax advantages but some of them are subject to taxation depending on the intent and structure of the business and the individual’s ability to control the corporation.

Corporations are subjected to double taxation, which is taxed on the corporate stock and dividends paid to the shareholders. This also includes the self-employed individual’s income that is subject to payroll taxation. A corporation may be limited by law to paying taxes only once to the government. Limited liability companies and partnerships are not taxed for the same reasons as corporations. Neither are partnerships taxable unless the partners are personally liable for all the debts of the partnership.

Some businesses are incorporated as cooperatives. Cooperatives are organized similarly to corporations with one partner acting as the primary owner. Other types of cooperatives are cooperative profit sharing, limited liability company (LLC), and limited liability companies (LLC’s). Partnerships are formed to conduct business and are considered corporations for corporate purposes. Business partnerships allow individuals to form a partnership and each partner is liable for his/her portion of the partnership’s debts and profits. The IRS allows partners to restrict partners’ liability for their own financial losses; however, in most cases, partners are still taxed for their portion of the partnership’s income.

There are a few important differences between limited partnerships and limited liability companies that must be considered when determining the best method of structuring the business. A partnership is considered a pass-through entity for corporate purposes. This means that profits are passed through the business to the owners; they do not distribute their profits to the partners. In a limited partnership, one partner makes all of the decisions and receives all of the assets, whereas in a limited liability company each partner is personally liable for his/her portion of the business debts. This type of arrangement can help business owners reduce their personal tax liability.

Income tax is the biggest headache for many small businesses. Income or General Partnership (GP) tax is the portion of profit or loss that a partner directly receives and has no portion transferred to him/her. It is also important to remember that General Partnerships cannot use the assets and profits of a partnership for their own benefit. Income or General Partnership tax is calculated by adding the partners’ share of each partner’s net income and dividing by their net partnership income.

Limited liability partnerships are another common business structure that partners use to ensure that they will not be personally liable for their partner’s debts. Limited liability partnerships are set up as a corporation, but each partner has only a limited amount of liability for the partnership’s debts. If a partner is sued, the partner will have to pay his/her own fees unless the partner’s personal assets to cover the entire liability. In this way, only a limited number of partners will ever be personally liable for the business debts.

Another structure that some business owners choose is a C corporation. A C corporation is an entirely separate company from its owners. All the personal assets of the C corporation are owned by the corporation, which uses those assets to buy back the corporate shares of each partner. Because the owners of the C corporation are unlikely to be sued, they will also not personally be responsible for the debts of the business.