Business Formation, Self employed

Self Employed: Step #1 Structure

In case you haven’t noticed, new businesses have been sprouting around Baldwin City, filling the older buildings with brand new enterprises and livening up the downtown sidewalks and brick roads. Every new business faces the same initial question, “what business structure will I take?”  The business structure you choose influences everything about how you do business. You can find these classifications spelled out on the IRS website and listed here.

Sole Proprietor or Partnership
Perhaps you are a sole proprietor, a person who owns an unincorporated business by himself or herself.  Or, you may choose to establish a partnership, which is a business relationship between two or more persons who expect to share the profits and losses of the business venture in predetermined percentages and pass through these gains and losses to their personal tax returns.

Corporation

You may want to incorporate your business, which means you form a taxable entity and exchange money or property or both for the corporation’s capital stock. The S corporation is a form of corporation that passes through its gains and losses to its shareholders. Only certain corporations can be S corporations.

Limited Liability Corporation (LLC)

You can also form an LLC according to the laws of the state you operate in unless your business is a bank or insurance company. According to the small business administration (SBA), LLCs protect you from personal liability.  In most instances, your personal assets—like your vehicle, house, and savings accounts—won’t be at risk in case your LLC faces bankruptcy or lawsuits.

An LLC is treated by the IRS for tax purposes as either a partnership that passes through income and losses to its members (owners) or as a corporation and is a taxable entity.  An LLC can have only one owner (a single member) in most cases and is treated by the IRS, for tax purposes, as an entity not separate from the individual owner.

New Frontier Tax and Business Services can help you with your start-up activities, tax planning, bookkeeping, and payroll.  Give Pam or Robb a call at 785-594-1204 or send an e-mail to pfersuson@newfrontiertbs.com

New Frontier Tax and Business Services can help you with your tax planning, bookkeeping, and payroll.  Give Pam or Robb a call at 785-594-1204 or e-mail pferguson@newfrontiertbs.com
rferguson@newfrontiertbs.com

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