setting up the correct entity helps protect assets and minimize taxes
Starting a new business venture entails various crucial stages to establish a solid foundation and ensure prolonged success. Once the decision to start a business is made, the focus shifts to actively engaging and serving customers. While essential legal procedures like business registration, acquiring required licenses, and comprehending tax responsibilities must be dealt with, they typically aren’t the initial priorities for most startups. Establishing the business structure and implementing a system to handle compliance needs are vital for sustained customer service in the long run.
challenge
Determining the appropriate business entity is a fundamental challenge for entrepreneurs. It involves choosing between options such as sole proprietorship, partnership, corporation, or limited liability company (LLC). Each structure has unique implications for liability, taxes, and management, making the decision complex and critical to the business’s future:
- Business Entity:
Business entities are formed at the state level and usually through the Secretary of State. The forms and requirements for each state can be different and navigating the government process can be confusing. - Federal Tax Status:
After your business is registered with the state you can file for your Federal tax ID (EIN). Depending on your business entity there is typically more than one way to be taxed. You could be a pass-through/sole proprietor, partnership, S Corp or C Corp. - Additional Tax Registrations:
Depending on your business needs there are additional tax accounts you may need to register for including state payroll tax (SUI), state income tax and/or sales and use tax. Each of these will have unique deadlines that are typically different from each other and federal tax deadlines.
solution
To address this challenge, entrepreneurs can seek professional advice from legal and financial experts who specialize in business structures. Consulting with professionals helps in understanding the legal and financial implications of each entity type, considering factors like liability protection, taxation, and operational flexibility. Entrepreneurs should also evaluate their business goals, long-term plans, and the level of control they want to maintain to make an informed decision:
- Legal Advice:
Consulting a legal expert will help business owners plan for potential risks as their business grows and also help to set standard operating terms between partners and/or investors. While we cannot provide legal advice we can help work with your lawyer to determine the best entity. - Formation Services:
Our formation services paired with a consultation can help you get the right structure setup for your needs. We will take into account your specific situation and provide advice on which taxing status to utilize. We’ll then help you file all the necessary forms to be in compliance. - Compliance Management Toolkit:
All clients at Abbott CFO Solutions get entered into our complaint toolkit that helps alert of all upcoming deadlines across local, state and federal requirements.
results
Collaborating with Abbott CFO Solutions to establish your business ensures a streamlined process, committed to simplicity, and crafting the most tax-efficient structure tailored to your requirements. Our ongoing support extends beyond the initial stages, assisting your business in maintaining compliance in the years following its inception.