One of the first and most important questions each business owner is going to face is what legal structure I should choose for my business?
Each business entity has its own legal and tax implications. Deciding which entity to form is a tough decision and making the right decision can save a fortune.
Legal entity is generally a legal structure that is separate from the owners of the business. In some cases, it may or may not be taxed independently from its owners.
One of the most popular business structures in the USA is an LLC (Limited Liability Company).
The main LLC’s advantages are:
• LLC’s ability to protect owner’s personal assets by “limiting his/her liabilities” to the amount invested into the business
• Simple formation and maintenance
• Tax benefits
• Few record-keeping requirements
• Flexible Management and ownership
By forming a limited liability company (LLC), you and any other members of the LLC generally cannot be sued and held personally liable for debts incurred by the business. This means that your personal assets – such as your house, real estate, vehicles, investments, stocks, and financial portfolio – are out of reach of the LLC’s creditors or disgruntled clients, in most instances.
But when it comes to the tax implications, things are getting more complicated with LLC.
Unless an election is made, a domestic LLC defaults to:
• A Disregarded Entity (if it has a single owner)
• A Partnership (is it has two or more members)
As an LLC’s owner you may want to consider making an election and have your business classified as an C-corporation of S-corporation for the tax purposes. There are many facts and nuances to consider before the final decision is made.
We strongly recommend our clients seeking professional help in choosing the right legal structure for their business. Some of the elections initially made cannot be subsequently changed for at least 5 years without IRS approval.
With SunTax Consulting you can be confident that you made fully informed decision that best suits your needs and circumstances.
We are here to continuously support our clients in accomplishing their business and personal goals
We offer 3 Business Formation packages to our clients:
1. Basic: We will analyze your projected revenues, potential risks, liabilities and tax implications. Finally, we will provide you with the list of options you have together with the corresponding calculations and “pros” and “cons” of each option
2. Standard: Basic + Registered Agent services: we will take care of all the registration paperwork, file annual reports for the business at the state level, apply for EIN with IRS, etc.
3. Advanced: Standard + Business Plan Writing/ Financial Modelling
