When the time is right to start a new business, wading through the alphabet soup of business formation can be difficult. Choices for a new company include using an LLC, corporation, LP, LLP, LLLP, or a number of other types of entities.
Every business endeavor should be carried on inside of a business entity. Otherwise, if liability occurs as a result of the business activity, the owners could be financially obligated to respond. In a properly structured business entity, the liability of the business should not reach the owners.
When setting up a new business, there are two primary concerns: asset protection and tax efficiency. A proper asset protection structure ensures that the personal assets of the owners are not made available to the creditors of the business. It also protects the business assets from the personal liability of its owners. A proper tax structure provides an efficient flow of value from the business to the owners as well as flexibility with respect to planning for growth.
At Monarch Wealth Attorneys, our firm has experience designing business structures from simple one-person operations to multi-country organizations.
One business setup concept that is not well understood by many individuals, even seasoned entrepreneurs, is the difference between the type of entity and how it will be taxed. For instance, we set up many operating domestic businesses as limited liability companies taxed as subchapter S corporations. This structure provides very good asset protection for the owners and the ability to receive both pass-through tax treatment as well as the ability to make profit distributions.
Getting the structure of a business right when it is set up is important. For instance, there are time limits that must be observed when asking the Internal Revenue Service to change the tax character of your business. Working with us offers a solution. We know how to get the setup of your business right from the beginning.