The word business literally means a organized set of actions taken to promote commerce or production. The word business also refers to an entity or person engaging in commercial, productive, or economic activity. In more modern times, business is more often used to refer to a business enterprise. Businesses may be either for-profit or non-profitable entities that conduct to meet a social objective or further an educational goal. Although businesses are distinguished by the intent and purpose of conducting business, they typically share some common characteristics.
Most businesses are established by individuals, either individuals or corporations, who control or are associated with the business. A number of variations on the name apply to privately held businesses as well as publicly held corporations. A privately held company may be comprised of an individual or multiple shareholders or owners. A publicly held corporation is controlled or majority owned by the government. Both types of corporations are required to register their names with the appropriate state authorities before beginning business.
All corporations are subject to statutory and common law taxation. These taxes are specified in the corporation’s Articles of Organization. All corporations must pay income and property taxes. All corporations are also required to pay corporate taxes known as income tax. Corporations may also be assessed additional sales and use taxes if the operation of the business substantially affects the value of the property and income of the corporation.
Corporations and LLCs are different from sole proprietorships and self-employment. A corporation or LLC has limited liability. It is generally recognized as an separate entity from its owners have the right to run the business as their own. It does not enjoy the protections of personal income and payroll taxes. Self-employment enjoys those protections.
All corporations and LLCs are subjected to federal and state taxation. The way the states tax corporations and LLCs varies. Some states allow corporations to be taxed like private individuals. Other states treat corporations and LLCs as partnerships.
As with all other things, you should investigate your options carefully. You should consult a qualified attorney if you are considering incorporating. Your attorney can give you guidance on incorporating in the state of your choice. He or she can also give you advice about incorporating as a sole proprietor. If you incorporate as a C corporation or a LLC, your business will be treated as a sole proprietor.