Entity Setup And Renewal

One of the biggest decisions for your business is deciding whether to be a sole proprietorship, partnership, S-Corp, C-Corp or LLC. We’re here to help. Review the following options and most importantly, give us a call to discuss your options and which one is best for you. Visit here for additional help!
Sole Proprietorship: You’re the sole owner, with nothing to lose as far as liability goes
Pros:
  • Entity option with the least amount of paperwork
  • No state registration required
  • Easiest to file your taxes under
  • Easiest to liquidate assets (if necessary)
  • Profits are only taxed once yearly
  • You, the owner, makes all business decisions with complete control.
Cons:
  • Unlimitied liabilities with the risk of losing everything in the event of a lawsuit
  • Obtaining business loans is more difficult as banks arae more leery of sole proprietorships.
  • Liquidation is the only option in the event of the owner’s death.
Partnerships: A sole proprietorship with more than one owner
Pros:
  • Partnerships are as easy to start as a sole proprietorships
  • Different owners can bring different strengths to the business
  • You can establish your founding agreement to state that the partnership continues in the event of one partner’s death.
Cons:
  • Partners may be jointly liable for actions of other partners
  • Partners are equally liable for the company’s debts and responsible for obligations
  • Should your business not make enough money to pay debt, any partners’ personal assets can be garnished
  • You’re not a registered business entity, so it may be more difficult to get a business loan, build credit and even earn large clients
  • Partnerships may face danger if the partners feud, one partner wants out of the business or dies
Limited Partnerships (LPs): A registered business partnership where the partners either own/operate the business, or act as “silent partners” who only act as investors
Pros:
  • Investors can serve a limited partnership role without personal liability
  • General partners receive the funding they need while still acting as the business’ sole decision makers and higher-ups
  • Limited partners can back out anytime without dissolving the whole business
Cons:
  • General partners bare sole responsibility for the business’ debts and responsibilities
  • Costs more to create and requires a state filing, unlike general partnerships
  • If a limited partner becomes too active in their business role, even unintentionally, they could be personally liable for the business
C-Corporations: A legal entity that exists separately from the owners of the company
Pros:
  • Owners aren’t personally liable for debts and responsibilities of the business
  • C-Corporations give you more opportunity for tax deductions than any other business entity option
  • The ability to offer stock options gives you another potential revenue stream
Cons:
  • Filing fees make this business entity more expensive than other business entiity options
  • C-Corporation companies pay business taxes while shareholders pay taxes on their personal returns for any dividends, leading to double taxation.
  • Any business losses cannot be deducted from owners’ personal tax returns
  • Numerous requirements to meet the “corporation” definition: Bylaws, meeting minutes and board/shareholder meetings, just to name a few
S-Corporations: A legal entity whose profits and losses pass through the owner’s personal tax returns, with corporate-level taxes
Pros:
  • Owners aren’t personally liable for debts and responsibilities of the business
  • S-Corporations are taxed similar to a sole proprietorship or partnership, so there’s no corporate taxation or double taxation.
Cons:
  • The “corporate” definition still needs met, so you’ll still need bylaws, and hold board/shareholder meetings (which can consist of one person).
  • S-Corps have more limits on issuing company stock
  • S-Corporations can also be more expensive to create than sole proprietorships or partnerships
Limited Liability Company: Also called LLCs, these take a mix of the positive aspects of the other business entity types
Pros:
  • Owners aren’t personally liable for the business’ debts or responsibilities
  • The business owner gets to decide whether the LLC is taxed as a partnership or corporation
  • You don’t have to have “boards,” “shareholders,” or those other standard corporation definitions
Cons:
  • It’s more expensive to register an LLC than proprietorships or partnerships

Let Us Help:

Practicing Thankfulness in Your Business

Does your family sit around the table at Thanksgiving dinner and share something they’re thankful for?I’ve been at those holiday meals many a time. I appreciate the intent, and will admit it’s usually effective in getting me to feel more grateful, but I do wish those...

Alternative Approaches To Paid Time Off Policy for Businesses

October is right around the corner. So is the October 15th extension deadline. And so is the fourth quarter for your business.As we approach Q4, be mindful of the usual year-end accounting needs and reporting requirements that will be popping up. We’ll keep you...

Leadership and Empowerment for Business Owners: A Story

Let me begin by noting, if you were looking to file for the Employee Retention Credit this year, heads up that the IRS isn't processing any new claims through the end of the year. This is an effort to keep you out of hot water if you shouldn't be claiming...

TCG Accounting on What “Open For Business” Means To The IRS

We’re seeing businesses across the nation acknowledge this week’s 9/11 day of remembrance in really special ways. It’s been 22 years already.Looking back, 2001 and 2020 are similar as stand-out turning points for America, albeit in different ways and for...

Work From Home Policy for Businesses

There’s no better way to celebrate work than by taking a day off. The irony of the Labor Day holiday gets me every year, but I do hope that it provided a little extra rest on the front end of a busy fall season.I mentioned in one of my recent notes another piece of...

Facing the AI in Business Trend in Your Business

Since the release of ChatGPT in November of last year, headlines about AI in business have been incessant. One of the biggest controversies is whether or not AI is a threat to the job market. Lots of differing opinions on this one, and time will soon reveal...

Compensation Is Just the Start, Business Owners

We’re just over a month away from the MLB playoffs, and this year (like every year) has had its share of sketchy calls that fans and players have been unhappy about. While not everyone’s favorite summer pastime (the sports season that never ends still has more...

TCG Accounting’s 4 Straightforward Questions to Uncover Your Business Why

I suppose there’s never been an easy time to be in business. It’s tempting to look at the current economic situation and cite all the things working against business owners right now. And Google helps with that... My internet search this morning lent me the...

Why Married Owners Might Choose the QJV Route

Remember three years ago when you depended on Zoom for work meetings and virtual schooling for your kids? While you’re probably really grateful the second one isn’t a reality anymore, the first one still had its appeal (unless something like this...

Business Cash Advance: A Loan Alternative for Businesses

This year has been a less-than-fun rollercoaster in the world of finance.Well, good news on that front — no more recession bogeyman lurking under the bed, at least that’s what the Fed declared as they raised rates again last week. Doesn’t mean more interest rate...

Ready to come in for an appointment?

Click here to schedule a time to meet with us. We will NOT make dealing with a tax professional as painful as it’s been in the past!