Incorporation Proves Beneficial to Businesses

Author: Keith Huggett

Incorporating your business not only lends credibility to it, but also builds in protection for your personal assets. Without the virtual shelter of incorporation, you could lose your home and other personal property if someone sues your company.

But which tax-efficient business structure (incorporation option) is best for your business? It depends on the size of your company and additional factors. Here are some of your choices and some general guidelines:

• C corporations – C corporations are appropriate for large companies that have more than $10 million in assets and file more than 249 returns with the IRS annually. These include the Form 1120 corporate return, 1120-W estimated tax returns and employment/unemployment  tax returns.

• S corporations – S corporations have fewer than 101 shareholders; these must be individuals or certain estates and trusts that function as individuals. Such corporations allow shareholders to pass income and losses through to their personal returns, which lets shareholders avoid the double taxation that can occur with C corporations.

• Limited Liability Companies (LLC) – LLCs are becoming more popular because of their simplicity. They grant the owners of the business personal asset protection, but individuals can choose to file personal returns instead of corporate ones. Small business partnerships and single-owner small businesses typically find that an LLC is the most tax-efficient business structure for their needs. Still, it depends on your local state laws and type of business. For example, insurance companies and banks cannot form LLCs.

This is a critical decision, one that will have great impact on the future of your company. So you must choose wisely. At The Tax Office, we specialize in helping you choose a tax-efficient business structure that meets your unique needs.

We also offer tax preparation, planning, representation, online bookkeeping and complete accounting services for you and your business. We will listen to you and help you determine the best ways to grow.

Contact us today to see how we can help you put the pieces of your company's financial puzzle together.