Correctly classifying your business will help you to avoid over paying taxes. Most new business owners initially aren’t experienced enough to make this kind of decision. By working with an experienced CPA for your Cary business, you are setting yourself up to maximize profit.
When you start your business, make sure that you know which entity classification is best for you. There are several types of business entities and choosing the right one can be a challenge. An experienced small business accountant can guide you through the process, helping you select the entity best for you!
Your business is required to choose an entity classification to define the company’s structure of operation. Choosing the right option for your business is imperative to avoid tax problems.
The sole proprietorship is the simplest business form. Under a sole proprietorship, one can operate a business without it being a legal entity. It simply refers to the fact that the person who owns the business is personally responsible for its debts.
A corporation is a company or group of people who are authorized to act as a single entity and be seen as such in the eyes of the law. This means that a corporation is the creation of another person.
One of the most popular startup options that people select. An LLC, limits the liability of the partners while giving them options with their taxes. These partners have the option to pay their taxes as an individual or as a corporation.
Similar to a sole proprietorship but with multiple partners. In a general partnership, all partners operate jointly with unlimited liability. This means that their personal assets are liable to the obligations of the partnership.
A partnership of two people where one assumes personal responsibility and the second assumes limited liability. Crucially, in an LLP the full liability partners hold the rights to make decisions and changes to the business, while the partners who are limited in their liability are not authorized to make these changes.
Generally used by industry professionals requiring a license. Most of the time, these people are subcontractors who hold a state license.
Generally a charitable organization such as a church or charity. In certain instances, these organizations can be exempt from taxes. Generally, these are not recommended for small businesses. Another reason is if the business needs to claim a loss, it is more beneficial to claim those as an individual rather than a corporation.
An experienced accounting team can provide you the support you need to help your business become successful and maximize your profit. Our goal is to provide opportunities for you to successfully manage your income, expenses and tax liability.
Find out how C.E. Thorn, CPA, PLLC has helped the Cary area startups and early stage businesses reduce their costs and limit their tax payments. Give us call at (919) 420-0092 or complete the online contact form to speak with a seasoned small business accountant today!