Business Entity & Tax Structure

Of all the decisions you make when starting a business, probably the most important one relating to taxes is the type of legal structure you select for your company.


There are two main benefits of a business entity that an entrepreneur should focus on. One is to protect yourself from getting sued personally and the second one for reducing his taxes.


There are different forms of business entities - sole proprietorship, partnership, C corporation, S corporation, limited liability company (LLC) and limited liability partnership (LLP). All these entities have their own tax consequences and hence should be chosen wisely.

Limited Liability Companies (LLCs)

Limited Liability Companies (LLCs)

  • Independent legal structures separate from their owners.

  • Help separate your personal assets from your business debts.

  • Taxed similarly to a sole proprietorship (if one owner) or a partnership (if multiple owners).

  • No limit to the number of owners.

  • Not required to hold annual meetings or record minutes.

  • Governed by operating agreements.

C Corporations

Good Debt: Money used to purchase appreciating asset.

Purchase a small cash flowing rental condo with the same down payment and get the rest financed. Now use the cash flow from the property to pay for the boat if you want one.

S Corporations

Good Debt: Money used to purchase appreciating asset.

Purchase a small cash flowing rental condo with the same down payment and get the rest financed. Now use the cash flow from the property to pay for the boat if you want one.

Partnerships

Good Debt: Money used to purchase appreciating asset.

Purchase a small cash flowing rental condo with the same down payment and get the rest financed. Now use the cash flow from the property to pay for the boat if you want one.

Sole Proprietorships

Good Debt: Money used to purchase appreciating asset.

Purchase a small cash flowing rental condo with the same down payment and get the rest financed. Now use the cash flow from the property to pay for the boat if you want one.

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