Helping You Choose the Right Structure for Your Small Business
The freedom and independence of owning your own business come with many responsibilities and tough decisions. You need to develop efficient systems that save you time and money and make wise choices to maximize your growth.
Straightaway, you are also required to choose a business structure that best suits your company’s needs. You should take serious consideration of how differently each structure manages liabilities, taxation, and record-keeping. You can avoid costly mistakes with the advice of a business professional.
Here are just a few of the most common business entities to consider:
Sole Proprietorship: The owner of the business maintains complete control and is liable for all the financial obligations. With this structure, no state tax filing is required.
Partnership: Two or more people agree to share in the profits or losses of the business. The business does not bear the tax burden of profits or the benefits of losses as they are “passed through” to the partners to report on their individual income tax returns. The disadvantage is that each person is liable for the financial obligations of the business.
Limited Liability Companies: Also known as LLCs, these are a hybrid entity bringing together some of the best features of partnerships and corporations. You get liability protection while avoiding double taxation. There are no limitations on shareholders and earnings and losses are passed through to owners and included in their tax returns.
S Corporation: There is no double taxation, and there is a limit of 100 shareholders, all of whom must be US citizens. Only common stocks can be issued, and shareholders can vote on major corporate decisions.
C Corporation: This is the most complex and expensive way to incorporate, but this structure protects your assets from liability. The corporation retains some of its profits tax-free and has both common and preferred stock, which helps it raise money.
Sound Advice in Business Structure Formation
You want your business to start on the right foot, and selecting the most beneficial entity is key to success. Give Bruce A. Miller a call to find the advice you need for business formation. We can help you maximize your profits and avoid costly mistakes.