Do You Have the Right Business Entity?

Have you reviewed your choice of business entity lately? That is the legal formation your business is operating under.

Perhaps you organized as a traditional C corporation to obtain the liability protection offered by a corporate structure. Perhaps you operate as a sole proprietor or in a simple partnership, giving up liability protection but avoiding the double taxation of corporate profits. Or perhaps you chose an S corporation or one of the relatively new limited liability companies (LLCs). These provide liability protection but allow profits to flow through directly to your personal tax return without double taxation.

However you do business, it’s a decision you should revisit periodically. That’s because there’s no single “correct” choice that is best for every business at all stages of it's life. Each option has its own advantages and limitations in a number of areas. Among the questions to consider are:

• How many owners or shareholders will the business have, now and in the future?

• How great is the need for protection against liabilities?

• How do you want profits to be taxed?

• How do you want to allocate profits and losses among owners?

• Do you want to provide retirement and fringe benefits to owners?

• What are the plans for future growth?

• What are the annual costs to maintain the business entity?

For more information on business solutions, or if we can assist you with any of your business concerns, please contact The Office of Debra R. Schill, CPA.