Paying Taxes and Setting Up Your Business

Starting a new business or looking at options for your existing business? There are a lot of choices to consider with different legal and tax aspects to each. To complicate matters, we have a new tax law taking effect which requires us to change the way we have considered these choices in the past.

What are the different choices of entities?

• Sole Proprietor

• Partnership

• Corporation

• Limited Liability Company

One of the first questions to ask is how many owners are associated with your business. However, that is just the beginning. Most of these have options beyond just the general selection. If your business entity is a corporation will it be a C Corporation or an S Corporation? Will you be paying self-employment tax or paying yourself wages and filing quarterly payroll tax reports? What is the projected profit of your business and what are the tax rates associated with the different entities?

Your choice of entity can greatly affect how much you pay in taxes and how you pay those taxes. It’s your money…how do you want to spend it?

While a lot of this can be done on your own, before you choose you should meet with an attorney and a CPA to discuss the legal and tax aspects of your business. If you are considering changing your existing business entity, there may be tax ramifications to doing so. Remember, forewarned is forearmed!