Archive for February, 2010
I hope to educate small business owners on the benefits of properly structuring your entity before you begin your business venture. It’s an easy process if you plan accordingly. Consult with the right people and get good advice on your overall strategy and your entity will offer you liability protection as well as a host of tax advantages that are being wasted.
Let’s talk about verbiage just so we are on the same page when we discuss entities. Corporations and LLC’s are types of entities. These shouldn’t be used in place of the word entity when speaking with an attorney or accountant because they might misinterpret what you are asking them to form and it could end up costing you lost of money.
A few of the benefits of corporations are primarily liability protection and tax savings. Liability protection is important because people are suing everyone these days and if someone slips and falls in your office, they could sue you for it. If you don’t have a properly structured entity in place, they could come after your personal assets instead of just the business assets. Tax savings is also a huge benefit
All states recognize the Limited Liability Company as a legal business entity. These entities are very easy to setup and most states have online portals to file them yourself. If you are unsure how to go about filing it, consult with a tax accountant or attorney and they will complete these steps for you.
Sole Proprietorship’s are by far the easiest way to form a business. You just have to use your social security number as the company’s tax id number as you file the business taxes on schedule C of your personal tax returns. There are some tax advantages to have this form of entity as well, especially if you run a very small business out of your house that doesn’t quite justify a corporation or an LLC.
Both Corps and LLCs offer similar advantages when trying to raise money from outside capital sources. It’s hard for an investor to take a piece of equity in a sole prop. It’s impossible because it’s just you. Having a separate entity allows for investors to come in and invest in exchange for equity.
Need to know where you can buy corporate seals or learn about a c corporation? We’ve got it all.
categories: entity,corporation,LLC,legal,strategy,finance