New Business Setup

The legal structure of your business can affect everything from your taxes to what you're liable for.

There are several types of business entities, such as sole proprietorships, partnerships, C corporations, S corporations, and limited liability companies (LLCs). It’s important to understand that the choice of entity is initially state-specific. You incorporate or organize at the state level. And not all entity choices are respected or treated the same in every state. Even if you incorporate in one state—say, Delaware, because you’ve heard that it’s tax-advantageous to do so—you may still be subject to filing requirements in other states. 

Equally important, your choice of legal entity may be different from your tax classification. Incorporation or organization with the Department of State in your state does not constitute a tax election with the federal government (IRS). For example, you can incorporate as a C corporation but elect with the IRS to be taxed as an S corporation. You could also organize as an LLC but opt to be taxed as a partnership, S corporation, C corporation, or even be disregarded.

Careful consideration of which structure is right for you is crucial because it will have implications for how the IRS and state governments tax your business profits. It’ll also determine whether your personal property is protected when others demand money from your business. Other considerations, including the management of the new business and your long-term plans for it, come into play as well.

Corporate CFO LLC can register a new corporation, partnership, LLC, PA, PC, or not-for-profit entity on your behalf. We can also assist you in obtaining federal and state tax numbers.