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There are several business entities that you can choose from when setting up your business. The most common business entities are the C-Corporation, S-Corporation, and LLC. Each type of entity has its own unique benefits and drawbacks, so it is important to choose the one that is best suited for your particular business.
Sanjiv Gupta CPA can help you figure out what type of business entity is best for your company. He will take into account the size and structure of your business, as well as your long-term goals. Different business structures are taxed differently, so it is important to choose the one that will minimize your tax liability.
If you are looking for a business entity that will offer you the most personal liability protection, then you may want to consider setting up an LLC. LLCs are not taxed as entities but instead pass through their profits and losses to their owners. This means that the owners are only taxed on their personal income, and not on the profits of the LLC itself. This can be a great way to minimize your tax liability if you are expecting to make a lot of money with your business.
If you want to set up a corporation, then you will need to decide whether you want to be an S-Corporation or a C-Corporation. S-Corporations offer some tax benefits, but they are also subject to more regulations than C-Corporations. C-Corporations are taxed as entities, and the shareholders are only taxed on their personal income from dividends. This can be a great way to minimize your overall tax liability, but it is important to make sure that you are in compliance with all of the regulations that apply to C-Corporations.
C-Corporation: A C-Corporation is the most common type of business entity. It offers limited liability protection to its shareholders, meaning that they are not personally liable for the debts and liabilities of the corporation. This type of entity also has the ability to raise capital through the sale of stock. However, C-Corporations are subject to double taxation, meaning that the corporation itself is taxed on its income, and then the shareholders are also taxed on the dividends they receive. This can make C-Corporations less attractive to small businesses.
S-Corporation: An S-Corporation is a type of business entity that offers limited liability protection to its shareholders. Like a C-Corporation, an S-Corporation is also taxed on its income. However, the shareholders of an S-Corporation are only taxed once, on the dividends they receive. This can make S-Corporations more attractive to small businesses.
LLC: A Limited Liability Company (LLC) is a type of business entity that offers limited liability protection to its members. LLCs can be either for-profit or nonprofit organizations. Unlike a corporation, an LLC is not taxed on its income. Instead, the members of the LLC are taxed on their share of the profits and losses of the LLC. This can make LLCs more attractive to small businesses.
Now that you know the different types of business entities, you can choose the one that is best suited for your particular business. If you are still unsure, you can always consult with a lawyer or accountant to help you make the best decision for your business.
To learn more about business entity setup, please schedule a consultation appointment with Sanjiv Gupta, CPA. He will be happy to answer any questions you have and help you determine which business entity is right for your business.