Different Types of Small Businesses
different types of small business different types of small business
Legal Status
The simplest legal forms for small businesses are sole proprietorships and partnerships. Neither is required to be registered with the state and taxes are managed on the owner's or partners' personal tax forms. These forms are best when there is little capital property or likelihood of being sued. A corporation is the opposite end of the spectrum, requiring registration with state and local authorities, separate business tax filings and regular meetings with an established board of directors. The S-corporation is a variation suitable for small businesses. Under this formulation, income is passed through to the individual stockholders and reflected on their personal tax forms. An LLC, or limited liability company, is another corporate variation which combines the liability protection of a corporation with the tax structures of a partnership.
Independent Contractors
Perhaps you are a house-painter, freelance writer or party planner. If you work on your own, at times and for clients you choose, your business may fall into the independent contractor category. As the name implies, you create agreements or contracts on a per-job basis to accomplish a set task. Although you are doing work for your client in each case, you are considered self-employed, since you are not employed directly by any of the people for whom you perform jobs. Self-employed individuals are required to file quarterly estimated taxes and are responsible for claiming income on their personal tax forms. Many independent contractors are also home-based businesses.
Physical or Virtual Location
Your small business may have an actual storefront or office, a solely online presence, or a combination of both. A legal practitioner, seamstress or caterer likely will have an office or physical location where she can meet with clients and keep the tools of her trade. A bookseller, translator or freelance writer, on the other
Legal Status
The simplest legal forms for small businesses are sole proprietorships and partnerships. Neither is required to be registered with the state and taxes are managed on the owner's or partners' personal tax forms. These forms are best when there is little capital property or likelihood of being sued. A corporation is the opposite end of the spectrum, requiring registration with state and local authorities, separate business tax filings and regular meetings with an established board of directors. The S-corporation is a variation suitable for small businesses. Under this formulation, income is passed through to the individual stockholders and reflected on their personal tax forms. An LLC, or limited liability company, is another corporate variation which combines the liability protection of a corporation with the tax structures of a partnership.
Independent Contractors
Perhaps you are a house-painter, freelance writer or party planner. If you work on your own, at times and for clients you choose, your business may fall into the independent contractor category. As the name implies, you create agreements or contracts on a per-job basis to accomplish a set task. Although you are doing work for your client in each case, you are considered self-employed, since you are not employed directly by any of the people for whom you perform jobs. Self-employed individuals are required to file quarterly estimated taxes and are responsible for claiming income on their personal tax forms. Many independent contractors are also home-based businesses.
Physical or Virtual Location
Your small business may have an actual storefront or office, a solely online presence, or a combination of both. A legal practitioner, seamstress or caterer likely will have an office or physical location where she can meet with clients and keep the tools of her trade. A bookseller, translator or freelance writer, on the other