The Basics of Business Structures for Entrepreneurs

Define the sole proprietorship as the simplest form owned by one person, with no separate legal entity and personal liability for debts; taxes and C form are covered next.

Explore how a sole proprietorship is taxed by detailing Schedule C filings, reporting income and expenses, calculating net profit or loss, and transferring to Form 1040; next, Schedule SE.

Understand schedule se and schedule c for self-employment tax in sole proprietorships, and why quarterly estimated tax payments matter. See a profit example and potential tax obligations to plan ahead.

Understand the sole proprietor paperwork: no state filings are required, and the business is the owner; if using a trade name, establish it in the next lecture.

Learn about trade names (dbas), how to obtain a dba through Arizona's secretary of state, and that a trade name carries no liability protection, with a note on sole proprietorships.

Explore the disadvantages of sole proprietorships, including personal liability, risk to personal assets, and business termination on the owner's death, while noting LLCs or corporations as alternatives.

A general partnership unites two or more individuals to run a profit-making business with no separation between owners and the business, making each partner personally liable for debts and actions.

Explore how general partnerships handle taxes, linking partnership form 1065 and Schedule K-1 to each partner’s individual Schedule C, and outline the required paperwork to start one.

Explore general partnership paperwork, including filing a trade name, drafting a partnership agreement to set structure and profit-loss sharing in any proportion, while Arizona law defaults to equal sharing.

Examine the advantages of a general partnership: easy setup at low cost, no separate tax return, profits reported on partners’ individual returns, and little personal liability exposure.

Examine the disadvantages of general partnerships, including personal liability for partners and debt exposure. Note how a partner's departure can trigger dissolution under state law and tax and paperwork considerations.

Explain what a corporation is, compare C and S corporations and their taxation, required paperwork, advantages and disadvantages, and the three-part management structure of shareholders, board, and officers.

Shareholders own a corporation through shares of stock and elect a board of directors to oversee management, aiming to maximize returns through dividends and profits.

Shareholders elect a board of directors to oversee management and protect owners' interests. The board selects officers such as the CEO, reviews budgets, and approves major plans.

Learn how a corporation is separate from its owners and protects them from personal liability, with shareholders liable only up to their investment, and note corporate taxation.

Learn how C corporations pay taxes on profits via a separate corporate return, and how dividends trigger double taxation, while small corporations often pay salaries instead.

Explore how S corporations are taxed, with profits and losses passing to shareholders, the Form 25 53 election, Form 11:20 S, K-1s, and reasonable compensation.

File articles of incorporation with the Arizona Corporation Commission, including statutory agent, number of shares, and directors and officers; prepare certificate of disclosure, annual reports, and minutes for internal use.

Corporations enable expansion and fundraising by selling shares, and protect owners from personal liability, but involve more complex paperwork; they're suited for businesses likely to be sued or seeking investment.

Explore the disadvantages of corporations, including high formation and maintenance costs and burdensome annual paperwork to comply with state law, noting size can affect applicability.

Learn what an llc is as a hybrid structure, differences between member-managed and manager-managed forms, its advantages and disadvantages, personal liability protections, and the tax and paperwork requirements to start.

Explore tax requirements for LLCs, including default taxation as a sole proprietorship, how owners file personal tax returns, and the option to elect S-corp status using Form 25 53.

Review Arizona LLC paperwork; file articles with the Arizona Corporation Commission. Note records of members and managers, including 20 percent ownership, and learn when to update ownership or address changes.

Explore the advantages of llc structures, including limited liability protection, continuity if owners exit, and flexible taxation options (partnership, sole proprietorship, or s-corp) for any business.

Compare the disadvantages of sole proprietorships and general partnerships with the alternative of an S corporation, highlighting self-employment tax and the 15.3 percent Social Security and Medicare burden.

Decide the best business structure for you by weighing liability protection, tax benefits, and paperwork, while consulting a CPA and a lawyer for guidance.

Learn to select and manage a business structure, open a separate business bank account, protect liability, and work with a CPA using a simple checklist.

Consult a CPA early to choose a structure, discuss fees and included services, and learn about bookkeeping, deductions, and how to prepare for tax season.

Learn to avoid costly tax mistakes and clearly define your business structure early. Consult with a CPA to navigate legalities and fees and build your company with confidence.