Entity Formation
Choosing the right business structure is key for managing taxes and liability. Whether it's a sole proprietorship, partnership, corporation, or LLC, each has its own tax advantages and protections. Consulting tax experts helps tailor your setup for optimal results, setting the stage for financial success.
LLCs provide maximum liability protection, can be passive, can be taxed as a partnership or a corporation, and offer flexibility in how profits are distributed. Forming an LLC can be complex depending on the purpose and structure of the company, and the State in which the LLC is formed.
C Corporations are separate legal and taxable entities that provide maximum liability protection, with perpetual existence, and have no shareholder restrictions. Some of the disadvantages to being a C Corporation include double taxation, high regulation, extensive and costly maintenance, and complex tax rules.
S Corporations are passive entities that provide asset protection, eliminate self-employment tax, shareholders can be employees and expand the range of pension plans available. Forming an S Corporation requires a special election with the Internal Revenue Service. The Corporation must also be domestic, offer only one class of stock, consist of only allowable shareholders, and have no more than 100 shareholders.