Have you reviewed your choice of business entity lately? “Business entity” is the legal form under which your business operates.
Perhaps you organized as a traditional C corporation to obtain the liability protection offered by a corporate structure. Perhaps you operate as a sole proprietor or in a simple partnership, giving up liability protection but avoiding the double taxation of corporate profits. Or perhaps you chose an S corporation or one of the limited liability companies (LLCs). These provide liability protection but allow profits to flow through directly to your personal tax return without double taxation.
However you do business, it’s a decision you should revisit periodically. That’s because generally there’s no single “correct” choice that is best for every business at all stages of its life.
The tax and nontax consequences of the legal form you choose for your business can be significant. To discuss whether your current business form is still right for you, give us a call.
Written by: Doug Rodrigues