1. Selecting the Right Structure For Your Business Advice from CPAs

2. Getting Started How should you operate and structure your business? It can be difficult, so ask for help Consult with a CPA to learn: –Filing and compliance issues –Tax benefits and detriments

3. Factors to Consider Tax and non-tax issues, including: –Ownership and continuity changes –Legal liability protection –Federal and state income taxes –Social Security taxes –And more

4. Structuring for Success Sole Proprietorship Partnership – General and Limited Corporation – S or C Limited Liability Company

5. Sole Proprietorship One-person business Not registered with state as a limited liability company or corporation Some states require license or permit

6. Sole Proprietorship Owner is personally liable Simplest for tax purposes Business ceases to exist with death of owner

7. Partnership A relationship between two or more persons Not classified as a corporation Draft agreement to address potential concerns Hire an attorney to write up partnership agreement

8. Partnership Two types: General and Limited General –Responsible for partnership liabilities, no matter which partner incurred them Limited –Only liable to the extent of partnership investment

9. Partnership Buy-Sell Agreements cover: –Who can buy a departing partner’s share? –The events that will trigger a buyout –What determines the price for a partner’s interest

10. Corporation Considered separate from owners and managers – independently liable and legal Owner’s personal assets are protected No limit on number of shareholders in C Corporation

11. Corporation Small Corporation –Creditors may require guarantees C Corporation –The company is taxed Personal Service Corporation (PSC) –Engaged in performance of personal services S Corporation –S status with the IRS under state law

12. Limited Liability Company Taxed as a partnership, but provides members with liability protection like a corporation Only the LLC’s assets are at risk Pass-Through Entity –Income passes through business to LLC members

13. Limited Liability Company Operating Agreement –Determines how income is allocated among members –Gives more flexibility than S Corporation File Form 1065 –An informational return with the IRS –Reports on member’s income tax return

14. Tax Considerations Partnerships, S and Personal Service Corporations: –Must conform taxes to that of their owners –May use tax year rather than calendar year on Form 8717 Avoid a year-end that is the busiest time for your company

15. Tax Considerations Sole Proprietorship –Reports on Form Schedule C on Federal Form 1040 Partnership –“Pass-Through” entity; Form 1065 and Schedule K-1 S Corporation –Taxed like a partnership C Corporation –Two levels of taxation

16. Compensation and Payroll Taxes Key issue facing small businesses: –Wage income v. Self-employment income –Make the distinction –Sole proprietors may prefer to pay themselves in the form of wages

17. Thank you and good luck with your future financial endeavors.