When I talk to my clients who are new business owners or clients who are considering starting a business, a major question I get is: How should I operate and structure my business?
Simply put, how you set up your business and whether you plan on going it alone or operating it with others will determine the type of entity you should select. Navigating through these decisions is not so simple. In fact, some of the issues can become quite daunting. That is why you need the services of a CPA. CPAs have worked with all types of entities and can walk you through all the filing and compliance issues as well as the tax benefits or detriments of the choices that you make.
Tax and Non-Tax Issues to Consider
You should consider both tax and non-tax issues when deciding on the best structure for your business. These include ownership changes and continuity; protection from legal liability; federal and state income taxes; and Social Security taxes. Other factors to consider include (1) whether you have or plan to have family members involved in the business; and (2) the ability to attract and manage capital.
Structuring for Success
The four choices that you have for forming the business:
1) Sole Proprietorship;
2) Partnership – either General or Limited;
3) Corporation – either a C or an S Corporation; and
4) Limited Liability Company.
What business entity structure is right for your business depends upon a number of factors including taxation and liability, as well as understanding reporting and tax characteristics of each entity type. You can avoid a lot of problems and save considerable taxes by getting the right guidance at the beginning as opposed to playing catch up and fixing problems that might have become larger due to poor planning. I look forward to serving your future business structuring needs.