Company Formation

As a sole proprietor, all profits are subject to self-employment taxes. Choosing the right business structure can help you manage risks and save on taxes. Our company formation services make this easy. When starting a business, the first step is deciding on the right business type.

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Suitable for small scale business
business form

What is Sole Proprietorship?

A sole proprietorship is a business in which an individual owns an unincorporated company, so the owner is personally responsible for the company's debts and other financial obligations. A sole proprietorship is the default business structure operated by a single self-employed person and is the most common entrepreneurial structure choice.

Tax Implications

Business income is taxed at the personal income tax rate
Subject to self-employment tax (Self-employment Tax)
All income with total taxes of $1,000 or more, taxes may be paid quarterly

Why choose Sole Proprietorship?

Easy to set up: No legal steps are required to set up. If you are the sole owner and start running a business, you will automatically become sole proprietorship.

Avoid double taxation: as a sole proprietorship operator, you can avoid double taxation.

Simple tax filing: There are not as many complicated schedules and tax forms compared to other business types, and tax reporting requirements may be simpler than other business types.

What is Partnership?

Partnership - A relationship between two or more people for the purpose of conducting trade or commerce. Each person contributes capital, property, labor, or skills and jointly shares in the profits and losses of the business. Generally, there are three types of partnerships: (i) General Partnership; (ii) Limited Partnership and (iii) Limited Liability Partnership.

Why choose a partnership?

Easy to set up: Although a general partnership does not offer legal protection, a partnership requires less paperwork than other business forms and has simpler tax filings.

Greater flexibility: Generally speaking, partnerships have fewer regulatory restrictions than other business forms, providing greater management and operational flexibility.

Tax advantages: The partnership itself is not taxed, and profits and losses are reported on the partners' personal tax returns, potentially resulting in tax savings.

Tax Implications

A partnership must file an annual return to report income, deductions, gains, losses, etc. from its operations, but it does not pay income taxes itself.
A partnership distributes profits or losses among its partners. Each partner is required to report his or her share of the partnership's income or loss on his or her personal income tax return.
A partnership must provide its partners with Form K-1 (Form 1065).

What is a Limited Liability Company (LLC)?

A Limited Liability Company (LLC) is one of the most popular and versatile business structures. Ideal for smaller organizations, LLC Is a legal entity formed at the state level. They can have one or more owners. Depending on the LLC election and the number of members, the IRS will treat the LLC as part of the corporation, partnership, or LLC owner's tax return (neglected entity or Disregarded entity).

Why choose a Limited Liability Company (LLC)?

Limited liability protection: In many cases, Member of LLC can reduce or even eliminate one's personal liability for business liabilities and debts.

Greater flexibility: Have the flexibility to choose how your business is taxed.

Tax advantages: [].

Tax Implications

An LLC can choose to be taxed as an "Limited by Shares". If it is not, an LLC with at least two members is classified as a partnership for federal income tax purposes; An LLC with only one member is considered a "disregarded entity" separate from its owners.
If not selected "Limited by Shares", the members are generally considered to be self-employed, that is, each member is required to declare his or her share of the LLC's income or losses on his or her personal income tax return and is required to pay Self-Employment Tax.

What is a Small Business Incorporated (S Corp.)?

An S Corp. is an entity established under state law. Incorporation means forming a company under state law. An S Corp. cannot have more than 100 shareholders or owners; an S Corp. cannot be owned by individuals who are not U.S. citizens or permanent residents. Additionally, an S corporation cannot be owned by any other corporate entity.

Why choose S-Corp.?

Limited liability protection: In many cases, shareholders of S-Corp. can reduce or even eliminate one's personal liability for business liabilities and debts.

Tax advantages: S-Corp. are not paying Federal income taxes at the corporate level, so shareholders can prevent the company's income from being double taxed.

Tax Implications

In terms of federal taxation, S Corp. choose to allocate a company's income, losses, deductions, and tax benefits to shareholders. Shareholders of S Corp. have to report their share of income or loss on their personal tax returns and are taxed at their personal income tax rates.
S Corp. responsible for paying employment taxes (Employment Tax), Includes:
- Social Security, Medicare, and Income Tax Withholding
- federal unemployment tax (FUTA)

Which business structure is best for my needs?

Consider tax, liability, ownership, and regulatory obligations when choosing your business structure. Also, account for individual and employee needs. Contact us for professional advice.

Need more help and guidance on taxes?

Whether you have chosen us as your tax representative to handle your tax returns for the year, or used our other professional services, you are welcome to Contact us. We are happy to give support to your tax return.

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