What entity should you have for your small business: Sole Proprietor, LLC, C Corporation or S Corporation?
It seems that the local small business world is gaining confidence again now after the “Great Recession.” This year at Unbehagen Advisors, in our tax and small business monthly accounting/bookkeeping and payroll divisions, we have been meeting with many new entrepreneurs that are considering venturing out on their own to start a new business. It feels like 2006 all over again…well, almost!
Among other topics, they ask us many questions about what type of entity to form for their new business venture. Sure, other popular questions include, “What can I deduct? How do I pay my employees and independent contractors? What kind of insurance do I need?” – among others. Yet, the main question that they initially ask is, “Should my business be a Sole Proprietor, a LLC, a C Corporation or taxed as a S Corporation?” Answering this question requires an individualized approach to each client.
There are many complex issues to consider when forming a small business entity, but with careful consideration it can make a dramatic difference in both legal protection and how much tax that the entity will owe on its income. Just by selecting a certain entity, legally, a small business can pay less tax than others on its income! However, the entity and owners must play by the IRS rules set forth to do so, and this must be explained clearly to them.
We offer a complimentary consultation, to those that wish to make an appointment to discuss the best entity for them. So, call us if you are considering going into business, or you already are in business and are just not sure if you have the correct entity type. We have been guiding many local small businesses in saving tax and valuable time since 1992!
Here’s to a profitable 2015!
Money Matters by
Todd Unbehagen, MAFM, EA, ATA, ATP
President/CEO – Unbehagen Advisors