Business Structures

Whether you are starting a new business or re-evaluating your existing business, it is important to choose the legal form best suited for you. This is an important decision since the tax rules differ for each.  We can assist in the selection and set-up as well as provide you with ongoing guidance and support of your new business entity, at a cost well below that of an attorney.

Sole Proprietorships

A sole proprietorship is an unincorporated business that is owned by one individual. It is the simplest form of business organization to start and maintain. The business has no existence apart from you, the owner. Its liabilities are your personal liabilities and you undertake the risks of the business for all assets owned, whether used in the business or personally owned. The income and expenses derived from the business fall under your own personal tax return.

As a sole proprietor, you are subject to the self-employment tax, which can be substantial.

Partnerships

A partnership is a relationship between two or more persons who join to carry on a trade or business. Each person contributes money, property, labor, or skill, and expects to share in the profits and losses of the business.  Partnerships are subject to special and complex tax rules.  However, a partnership is not a taxable entity.  Each partner includes his or her share of the partnerships income or loss on his or her tax return and is subject to the self-employment tax

C-Corporations

In forming a C-Corporation, prospective shareholders transfer money, property, or both, for the corporations capital stock. A corporation generally takes the same deductions as a sole proprietorship to compute its taxable income. A corporation can also take special deductions.

The disadvantage to a C-Corporation is the double taxation.  Profits of a corporation are taxed to both the corporation and to the shareholders when the profits are distributed as dividends, yet shareholders cannot deduct any loss of the corporation.

S Corporations

An eligible domestic corporation can avoid double taxation (once to the shareholders and again to the corporation) by electing to be treated as an S corporation.  As a pass-through entity, an S Corporation generally is exempt from federal income tax, therefore, avoiding the double taxation.  Shareholders include on their personal tax returns their share of the corporation's separately stated items of income, deduction, loss, and credit, and their share of non-separately stated income or loss. 

LLCs, LLPs and FLiPs

LLCs (Limited Liability Company) and LLPs (Limited Liability Partnership) are similar in many ways; however one key difference is that the LLP must be owned by more than one person, which can pose problems by nature.  The LLC is much like the S-Corporation in that it acts as a pass-through entity, whereby avoiding the double taxation.  However, an LLC is a bit more complicated to set up with more complex tax rules to follow.

When choosing between an S-Corporation and an LLC you need to consider many things.  Every business situation is different with different needs and expectations.  Thats where we, as tax professionals and business advisors come into play.

What we do:

Initial consultation to determine your needs and to assist you in choosing the right business formation

Corporate name search for proposed business name

Prepare and file all required applications and forms 

Obtain tax identification number                                              

Consult with you to complete and sign all corporate documents required

Step-by-step instructions on maintaining corporate shield

Professional binder of all legally required documents

On going

Once the new entity has been created, we offer individualized services to assist with maintaining the corporation, everything from bookkeeping to tax preparation.

Check out more details about our Accounting/Bookkeeping services.

More on the benefits of S-Corporations.