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What's the Best Structure for Your Business?
A P Schweitzer is serious about business. And we're serious
about helping others stay in business for themselves. We have
expert business consultants who can advise you on the right
structure to meet the goals of your business. Are you
interested in soliciting investors? Are you interested in liability
protection? Are you interested in specific tax benefits? We
can help!
Choosing a business structure is one of the most important decisions a small
business owner will make. It will affect the management of your business. It will
affect how the business is governed. It will affect how the business is taxed. And it
will affect many decisions that you make down the road. At A P Schweitzer we take
the time to listen to both your short term and long term goals. We analyze the pros
and cons of all possible structures, then recommend the best one for you.
Unlike other companies that prepare and file just the Articles of Incorporation or
Organization with the appropriate Office of the Secretary of State; A P Schweitzer
always takes the extra steps to register your company with the IRS; applying for a
Federal Tax ID (an EIN) and making entity classification elections if required. We
also register your company with the appropriate State Department of Revenue and
apply for required Tax Account IDs. Finally, we record your company with your local
County Clerk -- all of which is necessary for your company to be completely
organized as the entity you elect and all of which is included in our fee. Don't be
fooled by other incorporation companies that advertise a low fee, then charge extra
for over priced "add ons."
Below are some pros and cons of the most common business structures. We
encourage you to contact one of our business experts for a consultation, or seek
the advice of your current accountant before choosing a structure.
"Sub Chapter C" Corporations
"Sub Chapter S" Corporations
Limited Liability Companies
Limited Liability Partnerships
General Partnerships
Sole Proprietorships
A P Schweitzer is serious about business. And we're serious
about helping others stay in business for themselves. We have
expert business consultants who can advise you on the right
structure to meet the goals of your business. Are you
interested in soliciting investors? Are you interested in liability
protection? Are you interested in specific tax benefits? We
can help!
Choosing a business structure is one of the most important decisions a small
business owner will make. It will affect the management of your business. It will
affect how the business is governed. It will affect how the business is taxed. And it
will affect many decisions that you make down the road. At A P Schweitzer we take
the time to listen to both your short term and long term goals. We analyze the pros
and cons of all possible structures, then recommend the best one for you.
Unlike other companies that prepare and file just the Articles of Incorporation or
Organization with the appropriate Office of the Secretary of State; A P Schweitzer
always takes the extra steps to register your company with the IRS; applying for a
Federal Tax ID (an EIN) and making entity classification elections if required. We
also register your company with the appropriate State Department of Revenue and
apply for required Tax Account IDs. Finally, we record your company with your local
County Clerk -- all of which is necessary for your company to be completely
organized as the entity you elect and all of which is included in our fee. Don't be
fooled by other incorporation companies that advertise a low fee, then charge extra
for over priced "add ons."
Below are some pros and cons of the most common business structures. We
encourage you to contact one of our business experts for a consultation, or seek
the advice of your current accountant before choosing a structure.
"Sub Chapter C" Corporations
"Sub Chapter S" Corporations
Limited Liability Companies
Limited Liability Partnerships
General Partnerships
Sole Proprietorships
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| Discover The Advantages. Incorporate or LLC. |
Advantages
- No restrictions on who or how many
shareholders may own stock - Various types of income do not retain its
character as it passes to shareholders - Dividends distributed to shareholders
may be taxed at a lower rate - Limited liability for shareholders
- Attractive structure for investors
- Deductable fringe benefits
Disadvantages
- May be difficult to organize and/or dissolve
- Corporation pays tax on earnings & profit
and shareholder pays tax on dividends
creating a "double tax" - Corporation may be subject to
accumulated E & P Tax and AMT Tax - Capital losses only offset capital gains
- Courts have disregarded limited liability
under certain circumstances
Advantages
- Pass through tax treatment prevents the
"double tax" of C corporations - S corporations are not subject to income
AMT, AE&P, or PHC taxes - Losses pass through to shareholders
and may offset ordinary income - Stock transfers are often regulated with
shareholder transfer agreements - Limited liability for all shareholders
- Deductable fringe benefits
Disadvantages
- May be difficult to organize or dissolve
- Limitations on who may be shareholders
- All shareholders must agree to "S" status
- May have only one class of stock
- Shareholder employees must consider
IRS "resonable wages" rules - More than 2% shareholders are limited in
deductable fringe benefits
Advantages
- Easier to organize than corporations
- May have unlimited number and type of
members - Limited liability for all members
- Favorable pass through tax treatment
- Single member LLCs treated as
"disregarded entities" for federal taxes - May allocate start-up losses to investors
- Tax free contributions of appreciated
property - Liquidation of an LLC is generally a tax-
free event
Disadvantages
- To file as a partnership the LLC must
have more than one member; whereas
an S corporation may have only one
shareholder - Members cannot be employees, rather
distributive income is subject to SE tax - Some states may tax LLCs, while they
may not tax partnerships - Businesses operating in more than one
state may receive inconsistent treatment - Sale of 50% or more of interest may
terminate LLC for federal tax purposes
Advantages
- Easy to form as an LLC
- Favorable pass-through tax treatment
- Limited liability for limited partners
- Limited partner's share of distributive
income is not subject to SE tax - May regulate partners transactions
through the use of a Partnership
Agreement
Disadvantages
- Must have at least on General Partner
- General partners do not benefit from
limited liability protection - General partner's share of distributive
income is subject to SE tax - Some employee benefits are considered
guaranteed payments to partners and
subject to SE tax
Advantages
- Generally the easiest entity to organize
- Favorable pass through tax treatment
- Able to regulate a business partners
transactions through the use of a
Partnership Agreement
Disadvantages
- No limited liability protection for partners
- All distributive income is subject to SE tax
- Assets transferred into a partnership are
co-owned by all partners. No one partner
has a claim against a specific asset
Advantages
- No formal organization required
- Treated as a "disregarded entity" for tax
purposes. No separate return required - Losses offset other ordinary income
- Owner has complete control of business
Disadvantages
- Owner personally liable for all debts of
the business - All profit is subject to SE tax
- Capital sources generally confined to
owner's contributions and loans
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| 4135 Alexandria Pike, Ste. 205 Cold Spring, KY 41076-6802 Tele: 859.635.5737 Fax: 859.635.5727 |