One of the most important decisions that new business owners make is selecting their ownership structure. When beginning a business, you must decide what form of business entity to establish. When determining what type of entity will fit your business best:
limited liability company (LLC),
You must consider tax benefits that each may or may not hold for your business.
The answer to the question of “What Entity type should I choose?” depends on the individual circumstances of each business owner. Each situation I’ve been involved with has been different. You can’t just make an assumption that one form is better than another. To many variables.
It’s not a decision to be entered into lightly, either, or one that should be made without sound counsel from business experts. It’s important for business owners to seek expert advice from business professionals when considering the pros and cons of various business entities. And just because there is a sign that says CPA or Attorney at Law, does not mean that person is an expert in the field. Interview them first, Make sure they know the answers to the questions related to what you are doing.
I’ve heard horror stories from people who wish they had taken time and spent the money to get advice upfront. That advice can come from a variety of sources, ranging from the no cost/low cost, such as the SBA or the Service Corps of Retired Executives (SCORE), to EAs, CPAs or pricier attorneys who can serve as valuable sources of information throughout the life of your business.
We hung out and talked about the entity types in the Tuesday Hangout.
© 2013, Bruce McFarland. All rights reserved.