Becoming a business owner? Congratulations!
Let’s start with the groundwork, determining what type of entity is right for you. The structure of your entity will affect the method of taxation (new reform deductions for certain entities), as well as requirements on items including the type and number of owners, record keeping, and even the lifespan of the business. Read on for what you need to know:
A Sole Proprietorship is a common option and fairly straightforward to establish. What’s important to know is that this structure does not separate your company from your personal belongings. If your company were to be sued or go into default with creditors, your home, vehicle, and any personal assets are at stake as they’re considered part of your business.
Limited Liability Company or Corporation (LLC)
In contrast to a Sole Proprietorship, a Limited Liability Company or Corporation does separate your personal assets from the assets of the company, however, the upfront costs are typically higher than other types of structures. Here at PE CPA, our team is prepared to help ensure all LLC documents are properly filed with the state and your appropriate agreements are kept on record.
S Corporations are an attractive option because they reduce employment taxes for the self-employed. Plus, recent tax reform offers a 20% deduction available to owners of pass-through entities. Not sure what that means? PE CPA offers complimentary consultations to new clients. Together, we’ll delve deeper into this issue with you, explain more about other entity options available to you, and answer any questions you may have.
When it comes to choosing the type of business structure that’s right for you, PE CPA can help counsel you on the right choice to achieve your long-term financial goals.
Considering a change?
With the implementation of new tax laws, many business owners are considering a change to their entity structure to take advantage of the new corporate tax rate of 21%. While this news sounds enticing, keep in mind that corporations are double-taxed. Any money pulled out of the business is taxed to the recipient as dividends at 15 or 20%. Know that the choice to make a change isn’t always cut and dry. Potential benefits and disadvantages depend upon your income level among a number of other unique facts. Here at PE CPA, we advise booking a consultation to explore the potential benefits of your entity options in detail.
PE CPA is proud to serve business leaders in the following fields:
- Construction accounting
- Contractors and subcontractors accounting
- Home repair service accounting
- Real Estate investors, brokers, and Realtors accounting
- Non-profit accounting