The way you incorporate your business can have strong future financial repercussions. Selecting the right structure can contribute to your success but selecting the wrong one can end up costing you a lot of money. As your trusted business advisor, Ik Koo Kang CPA PC can help get your business off to the right start.
Starting a new business requires making a series of key financial decisions that can affect the profitability of your business down the road. Navigating the path to success is much easier when you have access to dependable financial guidance from an accounting professional. Ik Koo Kang CPA PC understands the advantages and disadvantages of each type of entity and how to determine which one is right for a business of your size in your industry. We’ll work with you to identify the entity that will help your business minimize its tax burden and maximize profits in the years to come.
We can also help file the appropriate documentation, assist you in developing a practical business plan and walk you through the process.
Common Types of Business Structures
When considering how to incorporate a new business we can explain the unique tax and legal implications. We’ll carefully evaluate your business and help you decide which type of entity best suits your needs. Some common forms of incorporation are:
Limited Liability Company (LLC)
A Limited Liability Company (LLC) is somewhat similar to a corporation or a partnership. The LLC protects the owners or members from personal liability for the company’s financial obligations but is usually treated as a non-corporate business organization for tax purposes.
Limited Liability Partnership (LLP)
A Limited Liability Partnership (LLP) includes general partners who have management authority and limited partners who invest cash in the company. General partners have personal liability for the firm’s obligations while limited partners are liable only for the amount of their investment. A Limited Liability Partnership is commonly formed with a C or S corporation as a general partnership, and it is not a separate tax-paying entity.
A C corporation is a separate legal entity. Its owners or shareholders have no personal liability for the company’s financial obligations. The corporation is taxed on its income and shareholders must also pay taxes on any dividends or income they receive.
Like a C corporation, an S corporation is a separate legal entity. The difference is that while shareholders are taxed on income they receive from the company, the corporation itself is not taxed. However, a company must meet strict legal requirements to qualify as an S corporation.