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Corporation/LLC
In Alaska, all incorporated companies are registered with the State of Alaska, Division of Corporations. A Registered Agent, many times one of the corporate officers, is appointed by the corporation to receive correspondence as well as legal documents. Let's take a look at some of the advantages and disadvantages of each structure:
Sole Proprietorship
For many small business owners, either a sole proprietorship or a partnership (if more than one person is involved) is sufficient. They are simple and inexpensive to create and operate and all profits and losses are reported on the owner's personal income tax return. The main drawback to a sole proprietorship is that the owner is personally liable for the debts of the business.
Corporations
Forming a corporation is more costly and complicated, but if personal liability is a worry, it's worth the extra time and money. The main benefit of a corporation is that it protects a company's assets. It also creates a "corporate veil" reducing the corporate officers' liability should legal action be taken against the corporation. Once you incorporate your business, no other business can legally use your corporate name.
Limited Liability Company
Owners of a limited liability company, or LLC, have limited personal liability for business debts, and the profit and loss of the company do not have to be allocated according to ownership interest. The Internal Revenue Service now allows an LLC a choice between being taxed as a corporation or a partnership. We suggest that you should consult a Certified Public Accountant or other tax professional for information regarding the tax benefits of each particular business structure to determine which choice is best for you.
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