“What is the best way to set this up -- as a sole proprietorship for each one or would it be a partnership or is there something other way. What would be best?”---->As you can see, I guess there is no perfect quintessential answer for the question; it depends on each business owner’s specific subjective business situation. The business structure, that is chosen, has a significant bearing on a number of factors that influence the day to day working of an enterprise. The way the entity is taxed, the degree of administrative requirements, the ease of operation, the extent of personal liability and a horde of others factors have a distinctive say on the working of a business and these in turn depend on the business structure. A sole proprietor is a solo business owner. If you are a sole proprietor, you are the only person who owns your business. While a limited liability company may have only one member, a partnership by definition has more than one partner, and a corporation usually has more than one shareholder. The ownership of a sole proprietor business is direct and simple; there are no shares of stock (corporation), partnership percentages (partnership), or member shares (LLC). A sole proprietor has complete control of his or her company. Since there are no other owners, and no legal agreement restricting ownership, the sole proprietor can whatever is necessary to keep the business going. In a partnership or LLC structure, ownership is designated by an agreement (Partnership agreement or LLC operations agreement). A sole proprietorship files taxes on Schedule C of the owner's personal tax return, and the income from the sole prop is taxed at the owner's personal rate. A single-member LLC may be taxed as a sole prop, while a multiple-member LLC is taxed as a partnership or c corp, I guess. Partnership income is taxed to the partners at their personal tax rates. The sole proprietor is liable personally for the debts of the business and for negligence and other personal liability. In the LLC and corporate forms, liability of the owner is limited to the owner's investment. A sole proprietorship is how many businesses start out. One owner, under the name of the person rather than having an official business name. On the other hand a LLC protects the owner(s) behind a business screen. Taxation under an LLC is much easier than it would be under any other form of business. As a sole proprietor, you do not get protection from any debt. It will affect you personally, where as an LLC takes on debt and it doesn’t come back to you as a person. Comparing the taxation of a sole proprietorship and a limited liability company can be confusing, especially for new business owners. Sole proprietors are subject to relatively simple tax requirements. However, LLCs are not subject to LLC-specific tax requirements. Instead, the owners of an LLC elect to be taxed as a sole proprietor. An LLC that elects to be taxed as a sole proprietor is subject to the same tax requirements that an actual sole proprietor is.
Please visit the IRS website for more info. On business entities here;
Entities: Sole Proprietor, Partnership, Limited Liability Company/Partnership (LLC/LLP), Corporation, Subchapter S Corporation
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