Choosing a business structure is based on several different factors; most of these factors are based on you as an individual, your current income, number of people involved in the business, their current income and the type of business you will be conducting.

The main factor when choosing a business structure should be based on your individual needs, not some cookie cutter template you buy on a website. We can customize your articles of organization or articles of incorporation based on your individual requirements.

As a business owner, it is important to work with someone that knows the different advantages and disadvantages of each business structure and when best to employ them.

If you have looked into business structures to any extent, you probably already know a few of the choices, C-Corp, S-Corp, LLC and LP. If you have learned anything so far, its probably bad information; something like; “You want to have an LLC and not a corporation because you want the income to flow through so you can avoid double taxation from C-Corp dividends”.

The following example will disprove the previous statement. A single person with $50,000 per year taxable income would pay $8843.75 in taxes based on 2009 tax rates. This same person decided to start a new company as a side business, the first year he made $50,000 in taxable income. If the business was set up as an LLC and it flowed through to the 1040 as additional income it would be taxed at the 28% level because it is on top of the $50,000 in taxable income already earned, producing a tax obligation of $21,720. If the same company was setup as a C-Corp the $50,000 in income can be held in the company and taxed at 15%, producing a total tax obligation of $16,343 (personal and corp). Thus creating a savings of $5376!

This is just one example showing how a little forethought and business structure planning, based on your individual circumstances, can be to your advantage.

View our Business Entity Comparison chart to get a better understanding of the different business entity available.

Please contact us to begin discussing your business structure planning.