{"id":71938,"date":"2016-12-14T12:35:57","date_gmt":"2016-12-14T17:35:57","guid":{"rendered":"https:\/\/www.chcfinc.org\/clearinghouse\/?page_id=71938"},"modified":"2017-09-07T11:52:32","modified_gmt":"2017-09-07T15:52:32","slug":"business-structure","status":"publish","type":"page","link":"https:\/\/www.chcfinc.org\/clearinghouse\/establish-your-program\/business-structure\/","title":{"rendered":"Business Structure"},"content":{"rendered":"

[vc_row type=”container” padding_top=”” padding_bottom=””][vc_column css=”.vc_custom_1444995043702{margin-bottom: 35px !important;}”][vc_column_text]The business structure is defined as the way a business is organized. It identifies who owns the company, how profits are distributed and which managers perform what jobs.<\/span><\/p>\n

\"business_structure\"<\/p>\n

In the United States, the three business structures recognized by the IRS are: <\/span>Sole Proprietorship, Partnership, <\/b>and<\/span> Corporation<\/b>. Other structures that are legally important (but not for tax purposes) include: <\/span>Limited Liability Company, S-Corporation, <\/b>and<\/span> C-Corporation.<\/b><\/p>\n

Tax treatment and risk management are the primary concerns in selecting a business structure. Generally, for family childcare providers there are no significant savings to forming an LLC or partnership.<\/span><\/p>\n

Personal liability protection obtained from LLC, partnership or corporation structures do not offer 100% security. Should a provider be negligent and a child is injured, or if the provider is accused of child abuse he\/she will not necessarily be protected.<\/span><\/p>\n

Resources and Links:<\/span><\/p>\n

Business Structure. (n.d.) Farlex Financial Dictionary. (2012). Retrieved December 15 2016\u00a0<\/span><\/a>[\/vc_column_text][\/vc_column][\/vc_row][vc_row type=”container” padding_top=”” padding_bottom=””][vc_column][vc_tta_accordion active_section=”0″ collapsible_all=”true”][vc_tta_section title=”Selecting a Business Structure: Sole Proprietorship” tab_id=”1483723232462-c33e629d-f44f”][vc_column_text]The main factors driving the decision to select a business structure are a liability of owners and tax treatment. Another significant consideration is the ease of establishing and, more importantly, maintaining the business structure. A provider\u2019s inability to comply with legally mandated procedures can result in loss of personal liability protection.<\/span><\/p>\n

Liability of Owners<\/b><\/h3>\n

Sole Proprietorship<\/b> \u2013 In a Sole Proprietorship, the owner has unlimited liability for obligations related to the business.<\/span><\/p>\n

Insurance<\/b><\/h3>\n

Sole Proprietorship<\/b> \u2013 The childcare business can be risky: A parent may suffer an injury in the provider’s home while dropping off or picking up a child; a child may suffer an injury while in the provider’s care; and the provider, an employee or family member may be accused of negligence or abuse. For a sole proprietor, the most effective way to protect personal assets (e.g. house, bank account, or other) is to obtain proper\u00a0<\/span>insurance coverage<\/span><\/a>.<\/span><\/p>\n

Tax Treatment<\/b><\/h3>\n

Sole Proprietor<\/b> \u2013 A Sole Proprietorship is not taxed: all income and losses pass through to the owner. Owners report all income and\/or losses and expenses with a Schedule C and the standard Form 1040. The \u201cbottom-line amount\u201d from Schedule C transfers to the owner\u2019s personal tax return. It\u2019s the owner\u2019s responsibility to withhold and pay all income taxes, including self-employment and estimated. More information on taxes <\/span>here<\/span><\/a>.<\/span><\/p>\n

Ease of Establishing & Maintaining<\/b><\/h3>\n

Sole Proprietorship<\/b> \u2013 A Sole Proprietorship is the easiest business structure to establish and maintain. A sole proprietor can open and operate without any formal organizing or operating procedures. While no filing with the state is required, all appropriate licenses\/registrations must be obtained. Also, should the sole proprietor want to operate using a name that is not the sole proprietor\u2019s legal name, the law requires that a <\/span>DBA\/Business Certificate<\/span><\/a> be filed with the respective County Clerk\u2019s Office.<\/span><\/p>\n

Resources and Links:<\/span><\/p>\n