Are you using the correct structure for your business? Let us show you the alternatives. More details are provided in our free Small Business Tool Kit, which you can get an electronic copy of below.
- Sole Proprietorship: Small Business Owner incorporated files Schedule C with personal tax return. All the earnings of the business subject to self-employment tax. Owner is held liable for Pacts of the business.
- Partnership: Business with at least two owners-not incorporated, but file a partnership tax return. Most of the earnings are subject to self-employment tax. At least one partner held liable for the partnership activities.
- Corporation: Separate and distinct entity. Subject to corporate taxes. Owners limited in the ways they can draw money from the company.
- S Corporation: Allows the owners more flexibility in receiving money from the company. Does not pay corporate taxes. Income and losses flow to the shareholders personal tax return. Earnings are not subject to self-employment tax. Several ways shareholders can reduce taxable income from the S Corporation.
- Limited Liability: Can be treated as corporation or partnership. Easier to form than a corporation.
For each of the above entity types, there are pros and cons. Some provide better asset and liability protection. Some result in lower taxes than others. Some are easier to administer, sell, or terminate than others.
If you are unsure which entity would best suit your company, let us sit down with you and help you understand the best kind of entity structure for your particular business and long term goals.
