Choosing the type of business entity you operate is one of the most important decisions you make when you first decide to start your own business. Not surprisingly, many tax advisors expect it to be one of the first topics you discuss.
There are many factors to consider in choosing a business entity. A qualified tax advisor can ask the right questions about your your short- and long-term goals and help you choose an entity that will maximize your profits and minimize your taxes right from the start.
Questions to consider include:
- How many owners will the business have?
- Do you expect losses in the early years?
- Who will own the business?
- What assets will be devoted to entity?
- What are the projected operations?
- How will the company be financed?
- How will the profits be distributed?
- Do you have an exit strategy?
The chart below offers a brief introduction to the basics of business entities – sole proprietor, single person LLC, partnership, LLC, “S” corporation and “C” corporation – to serve as a starting point in your decision upon a particular entity.
