Which type of business entity you choose will impact the way you maintain your records, the expenses that can be deducted and many other tax related implications. At Roland Fink & Co. CPA, a North Hollywood CPA firm, our tax consultants are experienced with structuring all entity types to minimize tax liabilities and ease administration.
This is one of the most important decisions you will make for your company and it can have both positive and negative consequences.
In addition, we can assist you in establishing your back-office operations. We'll help you develop the right accounting support, advise you on accounting software like QuickBooks and help you establish operational procedures that offer increased accountability and fraud deterrence.
A Limited Liability Company or LLC is a legal entity that allows you to protect your personal assets from the company’s liabilities. If your business is structured this way the "members" or owners will have no personal responsibility for the financial obligations of the business. With an LLC the business itself does not report taxes on its profits but uses "pass-through" taxation where the income and deductions are reported on the personal income tax returns of the members.
There are benefits to structuring as a C Corporation but one drawback is that the business is taxed on profits at two different points (double taxation). First when the profits are earned and again when the money is distributed to shareholders as dividends. One positive feature is that the owners are not held personally liable for the financial obligations of the business.
S Corporations are similar to C Corporations in a number of significant ways except that they are only taxed on the profits once. The company itself does not pay taxes but the income from the company is passed through to shareholders and they are required to report any income from the business on their own personal tax returns.