chandler AZ Accountant

GOT TAX QUESTIONS?

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Sundin & Fish, PLC

Certified Public Accountants
2450 S. Gilbert Rd, Suite 100
Chandler, AZ 85286

 

Phone: 480-361-9400

Fax: 480-393-5609

Email: paul@sundincpa.com

 

Business Entities: What Are My Options?

Starting a business is a very complex and emotional time. Business owners are faced with many important decisions, including establishing a business plan, raising capital and selecting the right employees. But one aspect that is often overlooked is the proper business structure.


One popular choice is the sole proprietorship. This is an unincorporated business that is owned by just one individual. It is an easy business structure to start and maintain. The business itself has no existence apart from the owner. The owner has the business risk for all assets owned. The income and expenses are included on Schedule C of your individual tax return.

 

Corporations are a more complex form of business structure. Each shareholder contributes cash and/or property, in exchange for stock in the corporation. Corporations are generally entitled to take the same deductions as sole proprietorships. A corporation is also entitled to certain special deductions.

 

S Corporations have become increasingly popular in recent years. Eligible domestic corporations are able to avoid double taxation by making an election to be taxed as an S corporation. In most situations, an S corporation is exempt from federal taxes other than a tax on certain capital gains and other passive income.

 

A partnership is another popular form of ownership. A partnership exists when two or more people join together to carry on trade or business activities. Normally in a partnership each partner contributes cash, experience, equipment or property, and/or labor and is due a share of the profits and any resulting losses of the trade or business. A partnership files a separate tax return.

 

A limited liability company (an “LLC”) is a business structure that is formed under state law. The members of the LLC are not personally liable for its debts. LLCs have certain default tax classifications, but may elect (under certain circumstances) to be classified for tax purposes as one of the entities previously discussed.

 

There are many factors that need to be considered when a business owner is considering business structures. No one entity is right for all business owners and the circumstances can change drastically based on your industry, personal tax situation, or state that you operate in. Make sure to seek the advice and counsel of a CPA or other qualified tax or legal professional.

 

Paul B. Sundin has been a CPA since 1997 and he specializes in business and real estate taxation.  Please contact Paul at 480-361-9400 or you can email him at paul@sundincpa.com.