When starting a business, you should begin by deciding what form of business entity to establish. The entity type you choose will determine several things including which income tax return form you have to file each year.

The most common forms of businesses are the sole proprietorship (Schedule C), partnership (Form 1065), corporation (Form 1120), and S corporation (Form 1120S). Each have their own unique tax structures with related tax liabilities to navigate.

To establish your entity structure, you should consult with a professional, as they will guide you towards the correct structure for your business type and goals. Tax considerations need to be factored into selecting the correct business structure.

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