Business Entity Set-up – Incorporating your business.

Choosing an entity for your business can be a bit complicated.  We help small businesses set up entities every year.  With our expansive knowledge of business management and operation, we can able to help you choose which entity is right for your new company, draw up the necessary paperwork and file with the proper federal and state departments.

Each entity has advantages and disadvantages.  The key is to select the one that streamlines your business operation.  We provide input to assist you in that selection.

The following are the entity choices available to businesses in the United States:

Sole Proprietorship or Doing Business As Entity

Sole Proprietorship or Doing Business As is the easiest entity to set up and maintain, but as the owner you incur all income in your personal tax return.   You are also personally liable for any debt incurred by the company and incur the risk of being sued, which could result in possible loss of personal assets.  If there are multiple partners or owners, the entity is classified as a General Partnership.

C-Corporation

A C-Corporation is an entirely separate entity which protects the owner(s) from personal liability.  Although more expensive to set up, it is the oldest type of business entity and conveys stability and prestige.  As a C-Corporation, you can enter into business contracts, purchase property. This entity alleviates the owner from financial debt incurred by the business as well as the possibility of being sued personally.

Although more complex to run and manage, under a C-Corporation a number of expenses may be deducted that cannot under an LLC, sole proprietorship or S- Corporation.  Profits are taxed at a lower rate and ownership can be transferred or sold at any time. Unfortunately, profits could be subjected to double taxation.

S-Corporation
After a C-Corporation has been formed, it may elect an “S-Corporation Status” by adopting an appropriate resolution and submitting the proper paperwork to the Internal Revenue Service.  Certain states require additional paperwork to be submitted as well.  Upon completion, the S-Corporation is taxed like a partnership or sole proprietorship. Board meetings and documentation of corporate minutes still need to be adhered to the same as a C-Corporation.

Ideal for a corporation consisting of one owner, S-Corporations give you the security and prestige of a corporate entity without double taxation – taxes on profits and losses are paid once through the owner’s (or shareholders) personal tax return.  Shareholders do not have to pay taxes on their dividends (income).  Unlike a C-Corporation, certain expenses cannot be deducted as they could under a C-Corporation.  An S-Corporation can easily revert to a C-Corporation status at any time.

Limited Liability Company (LLC)

Easy of manage and compliance requirements has led to an increase in popularity of the formation of Limited Liability Company within the small business community each year.

A combination of a corporation and partnership entities, LLC’s are made up of members rather than shareholders.  Considered a separate entity, LLC’s ensure limited protection, no stocks are owned and taxation is simpler than a C-Corporation or S-Corporation.  Business profits and losses are passed through to the owner’s personal tax return.

Each Limited Liability Company has as the base of its operating system an Operating Agreement document. It sets the rules for operating the company. When the business grows, this agreement can be modified.  Its members, usually at an annual meeting, must agree upon all changes.

The above information provides you with the basic business entity forms available.  There are numerous variations available.

Our motto is: When you succeed…. We succeed.

We can get your entity up and running in a matter of days as well as arm you with the knowledge needed to run your new entity.  We also provide accounting, bookkeeping, monthly payroll and tax services for businesses.