Choice of Entity
When beginning a business, you must decide what form of business entity to establish. Your form of business not only determines which income tax form you have to file, but impacts many other areas of your business There are advantages and disadvantages to each type of business entity. SAS will help you wade through the options and choose the one right for you. (see entity types below)
Once you have chosen an entity type we will register your company's name with the state. We will also file for your federal employer Identification number, enroll you in the electronic federal tax payment system and file additional tax forms based on your choice of entity.
Many new companies fail to set up their accounting system correctly. This can cost thousands of dollars in missed deductions. It also often results in significant expense and hours of frustration correcting errors. These new business owners usually do not realize they have a problem until last minute. They generally discover they have to file their income tax return and find they do not have their data ready. SAS will set up your QuickBooks accounting solution and either train your people or run it for you.
Business Development Consulting
SAS consulting services can help you drive your financial business results to the next level. Our team will carefully review your current operations and results to identify opportunities to increase revenue, to reduce operating expenses and to reduce tax liability. Our focus will be to leverage our expertise to improve operational efficiency in your back office, while you continue to drive results in the field. We can construct short or long-term business plans that directly support your bottom line objectives. We can bring a disciplined approach that will ensure your back-office operations do not undercut your front-office successes.
Factors to consider when choosing an entity type are:
- Company Size
- Business Type
- Personal Liability
- Type of Owners
- Number of Owners
The five main business entity types are:
Sole Proprietor - Someone who owns a business that is not incorporated. This type of business entity is simple, but provides no limit of liability to the owner. Income is reported on the individual's 1040 and is subject to self employment tax.
Partnership - A relationship between two or more persons to carry on a trade or business. A partnership consists of general partners and limited partners. Income is reported on an informational return and passed through to the partner's tax return. Income from a partner is subject to self employment tax.
Corporation - Shareholders exchange consideration for the corporations stock. A corporation is taxed as a separate entity. A corporation's profit is taxed on the corporation's tax return when it is earned. When a corporation distributes dividends they are taxable income to the owner. This is the infamous double tax for corporations.
S Corporation - Eligible corporations can avoid double taxation by electing S corporation status. In most cases S corporations are exempt from federal income tax. Income and expenses are reported on an informational return and passed through to the owners. S corporation income is not subject to self employment tax.
Limited Liability Company (LLC) - This is a relatively new business entity. Members of LLCs have similar liability protection as Corporations. Ownership is generally not restricted and may include non US citizens. There is also no maximum number of members allowed in an LLC. Most states also allow single member LLCs. The tax form used to report income for an LLC varies, but income and expenses generally flow through to its members. LLC income is subject to self employment tax.
Contact us today to discuss your business entity options.