Tuesday, January 19, 2010

Choices For Small Business

Only taking tax issues into consideration, small businesses have a difficult decision on when to either incorporate or organize as an LLC. For tax purposes, an LLC can be a single member, treated as a sole proprietor; a partnership, the default for a multi-member LLC; and a corporation or S-corporation. Your circumstances will determine how you wish to organize your business.

Most businesses are organized as an LLC, electing for the tax treatment of choice. As a rule of thumb, a very small business with a small profit or loss should default to a single member or partnership. Once a business has earning of $50,000, an S-corporation has advantages over other forms of taxation.

Organizing your business as an entity has long reaching ramifications. The decision should not be taken lightly. It is important you have a serious conversation with your friendly local accountant on how your business is organized. Delays can add to your tax burden. With increased complexity in the tax code, a regular consultation with your tax advisor is advised.

No comments:

Post a Comment