Choosing a Business Structure

There are many forms of business entities that you can establish when starting up your own company. The most common ones being sole proprietorship, limited liability corporations, partnership, corporation, and S-corporation.

The number one thing you must decide when beginning a new business is what form of entity to establish. The type of company your start determines which income tax return form you have to file every year.

The following are brief descriptions of the most common forms of incorporated businesses in Florida:  S-Corporation (Stock), C-Corporation (shareholder), LLC-Corporations, and Sole proprietorship.

A sole proprietorship is the simplest and least expensive business structure

A sole proprietorship is the most common choice among entrepreneurs–it’s easy and inexpensive and does not require much paperwork or financial investment in order for it to become official.

LLCs are corporations that offer limited liability for owners. They may be more beneficial than other legal structures if the company enters into litigation or has debts to creditors due to assets not being protected from personal bankruptcy laws.

 An S-Corp provides protection from personal liability while allowing for tax deductions

Corporations are more complicated than other entities because they are taxed on their earnings at both state-level rates as well as federal rate; however, corporations can offer certain benefits like higher limits for how many shareholders that may own stakes in the company (Sole Proprietor has up to 100 shares).

For more than one owner, an LLC may be the best option as it offers limited liability and pass-through taxation

LLCs can be a great alternative to starting a full-blown corporation as it has many of the same benefits without all of the additional requirements. All that needs to begin a limited liability company is a couple of minutes and filing a certificate of organization with the secretary of state where your business will be domiciled.

LLC’s are usually taxed at “pass-through” rates (similar to sole proprietorships) which means that all profits are taxed only once, regardless of how many owners the LLC has.

There are pros and cons to each entity type – consult with an attorney before making your decision.

There are different rules and regulations in each county, city, and state. Check with the Secretary of State’s office or an experienced attorney before filing for your business entity.

Choosing the right entity will help you in case of any unforeseen circumstances

Understand how each type of entity impacts taxes and liability

Choose a business structure that matches your needs, goals, and objectives. There is no one “best” entity type for all businesses.

An attorney can tell you if there are any restrictions on what kind of business can be conducted by the type of entity selected.

Choose a business structure that protects your personal assets and maximizes tax benefits.

When choosing an entity, consider the following:

Business Need, Goals, and Objectives

Tax considerations for the business

Personal needs of the business owner(s)

How an entity affects legal liability or other concerns.

Profits vs. Losses – Corporations can have different classes of stock which allows owners to separate profits from losses; LLCs do not allow this distinction.

Business owners sometimes use one business structure for specific areas of a business (such as real estate development) and another structure for other areas of the same business (such as a retail store).

Your choice affects how you report income, finding a tax attorney that specialized in strategy could help you in your choices and entity structure.

For example, you might have a corporation for your business of selling real estate and an LLC for all marketing activities to promote the business. Or you might have one structure that is treated as an S Corporation for tax purposes and another that is not taxed separately at all (the owners report their share of business income on their personal taxes.

A business attorney will be able to help with the formation of a business entity, general finance inquiries, and tax strategy questions.

When it comes to building out an agency on the consulting side, I have helped many businesses grow over the years by providing them with legal advice on how to best structure their company, understand their perfect buyer, Marketing Strategies, and how to operate for maximum profit!

The legal landscape surrounding digital agencies is complicated at best, and the recent ruling by the IRS regarding business expense deductions for software and computer equipment has only made it more difficult.

The current IRS guidance requires many businesses to capitalize (or write-off over time) their expenditures related to hardware, software, and applications.

I offer consultations where we will discuss your current situation and create a plan that is tailored to suit your needs. The consultation is free (there’s no obligation) and if you choose to work with me I will provide a full review of your business, including weaknesses, strengths, and opportunities for improvement.

This is just an example of what my agency can do for your agency!

Here are some of my strategies for scaling an agency:
  • Maintain and nurture a personal relationship with all clients, employees, subcontractors, and vendors.
  • Create customer-centric processes to increase productivity.
  • Give clear directives that align the expectations from both parties while providing feedback on how to achieve success.
  • Make sure you have enough high-quality content to share across all social media channels in order to create more leads.

My website offers free resources, tips, and tricks that will help you get started marketing your small-scale company.

If you’re ready to build a business that fits your dreams and goals, then I am here to help!

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