If you’re just starting a new business, the entity you choose can greatly impact your financial potential. Whether it is an LLC business formation or corporation formation, you need a tax and consulting firm that thoroughly understands the legal documentation process and has answers to questions that make a difference to your bottom line contact Anytime Tax Service today for a free consultation by giving us a call at (301) 512-1000. 

Business Formation Consultation

Business Formation is the start of an incredible journey – an adventure filled with potential pitfalls and potential rewards. The right legal structure for your business is one of many things that are important to consider before starting your business. Carefully consider the pros and cons of each business entity to determine which features best meet your needs.

Each type of structure has its own benefits and considerations that are affected by the business’ size, the number of owners and employees, the industry, and other variables. Each state passes its own business formation laws, and not all states allow for every type of business structure. This means that the requirements for forming a particular type of business vary from state to state.

Choosing the Right Business Entity

The business entity you choose can greatly impact your personal finances. Few consider the need to have a Tax Strategy in place before starting a new business. Yet, the right business entity can keep your business and personal finances separated and protect you from liability. From tax to personal liability, there is much to sort out beforehand.

Business LLC Formation

  • Legal structures are independent from their owners

  • Helps separate your business debts from your personal assets

  • Taxed almost identical to a partnership (if there are multiple owners) or a sole proprietorship (if there is only one owner)

  • There isn’t a limit to the amount of owners

  • Not bound to record minutes or hold annual meetings

  • Governed by operating agreements

Advantages of Forming a Business – LLC

There are many advantages to forming a business LLC including:

  • Pass-through taxation. You do not have to file a corporate tax return for a single member entity. Business owners report their profit and loss on their personal tax returns, avoiding double taxation.

  • Residency is not required. Individuals who choose an LLC entity do not need to be permanent residents or U.S. citizens.

  • Protection from law suits. If a LLC company is sued, the claimants are suing the company, not its investors or owners.

  • Tax Rates. With higher net income, a LLC could be taxed at a lower rate than a corporation.

C Corporation Formation

  • Independent tax and legal structures are separate from their owners.

  • Helps separate your business debts from your personal assets.

  • No limit to the amount of shareholders.

  • Taxed on shareholder dividends and corporate profits.

  • Must record minutes and hold annual meetings.

Advantages of Forming a C Corporation

There are many benefits of forming a C Corporation including:

  • Limited liability. This applies to employees, shareholders, officers and directors.

  • Never ending existence. Even if the original owner leaves the company.

  • Increased credibility. Gain recognition and respect among lenders and suppliers.

  • Potential growth is unlimited. The businesses growth has unlimited potential thanks to sale of stock.

  • No limit to the amount of shareholders. Although, once the company has 500 shareholders and $10 million in assets, it’s then required to register with the

    SEC (Securities Exchange Act of 1934).

  • Tax advantages. C Corporations have the advantage of being able to deduct business expenses from their taxes.

S-Corporation Formation

  • Independent tax and legal structures are separate from their owners.

  • Helps separate your business debts from your personal assets.

  • Personal tax returns are used for reporting the owner’s share of profit and loss in the business.

  • There is a limit to the amount of shareholders and they have to be U.S. residents or citizens.

  • Must record minutes and hold annual meetings.

  • Schedule K filing for any residual income.

Advantages of Forming S-Corporation

There are many benefits of forming S-Corporation including:

  • Limited liability. This applies to employees, shareholders, officers and company directors.

  • Pass-through taxation. You do not have to file a corporate tax return. Business owners report their profit and loss on their personal tax returns,

    avoiding double taxation.

  • Avoid double taxation. Income cannot be taxed twice – once as dividend income and again as corporate income.

  • Sales of stock. The company can entice investors by selling shares of stock in the company.

  • Never ending existence. Even if the original owner leaves the company or passes away.

  • Only have to file once a year. Unlike C-Corporations that have to file every quarter.