To start a new business is exciting but it’s important to take the time to make the right financial decisions at the outset or profitability could suffer later on. If you select the wrong structure when forming your business, a significant portion of your profits could be lost to taxes. Don’t risk making a mistake that could impede your goal of owning a successful small business. Instead, look for Consolidated CPA Service, Inc. for guidance. We’ll direct you toward the entity that makes the most sense for your business so you can minimize your tax obligations and realize higher profits.
In addition to incorporation services, we offer other business advisory services like business plan development and accounting software setup. A compelling business plan that clearly outlines your business goals and objectives will keep you focused. We’ll show you how to draft your business plan and explain what information should be included. We’ll also get you set up on QuickBooks so you can keep your books organized from the start.
We will discuss with you tax planning strategies planning and help to formulate your business plan.
Common Forms of Incorporation
Do you know the difference between a C Corporation and an LLC? Identifying the right business structure is confusing for the average person. Consolidated CPA Service, Inc. will explain the tax consequences related to each type of business structure and together we’ll find the best choice for your new business.
Limited Liability Corporation (LLC)
A Limited Liability Corporation or LLC is a legal form of company that allows you to protect your personal assets from the company’s liabilities. If your business is structured this way the “members” or owners will have no personal responsibility for the financial obligations of the business. With an LLC the business itself does not report taxes on its profits but uses “pass-through” taxation where the income and deductions are reported on the personal income tax returns of the members.
There are benefits to structuring as a C Corporation, but one drawback is that the business is taxed on profits at two different points (double taxation). First when the profits are earned and again when the money is distributed to shareholders as dividends. One positive feature is that the owners are not held personally liable for the financial obligations of the business.
S Corporations are similar to C Corporations in a number of significant ways except that they are only taxed on the profits once. The company itself does not pay taxes but the income from the company is passed through to shareholders and they are required to report any income from the business on their own personal tax returns.