Congratulations, so you’ve finally decided to take the plunge and become an independent business owner!

Along with the many other decisions you’ll have to make while preparing for your new business start up is deciding on the best tax entity for your situation.

Each tax designation comes with different taxing structures and filing requirements.

We can help you learn about your choices and choose the one that will give you the greatest tax benefit over the long run.

Starting out with the right tax entity will add to a solid foundation of planning that will help lead you to success. Here's a brief overview of the different entities.

Sole Proprietorship

• Does not require setting up a separate legal entity
• Provides no owner liability protection
• Any net income will be subject to self-employment tax in addition to income tax

Partnership

• Does not require setting up a separate legal entity
• Provides no owner liability protection
• Income is not taxed at the partnership level but flows through to the partners' individual tax returns
• Net income apportioned to general partners will be subject to self-employment tax in addition to income tax
• Any income apportioned to limited partners will not be subject to self-employment tax
• Capital distributions to partners are not taxed

C Corporation

• Requires setting up a separate corporate legal entity
• Provides some owner liability protection
• Net income is taxed at the corporate level
• Any dividends paid to shareholders are taxed at the individual level, resulting in double taxation
• Fringe benefits paid to certain owner-employees is deductible at the corporate level and not considered taxable income on the owners' individual tax return

S Corporation

• Requires setting up a separate corporate legal entity
• Provides some owner liability protection
• Income is not taxed at the corporate level but flows through to the shareholder's individual tax returns
• Capital distributions to shareholders are not taxed
• Fringe benefits paid to certain owner-employees is deductible at the corporate level and considered taxable income on the owners' individual tax return

Limited Liability Company (LLC)

• Requires setting up a separate legal entity
• Provides some owner liability protection
• For tax purposes, a LLC be can set up as a sole proprietorship, partnership, C corporation, or S corporation

Explore the possibilities for your business with us and we'll help you discover the business entity that is right for you! Once you've decided which entity is right, we are available to file for your corporate status, ensuring your paperwork is handled correctly the first time. The Associates at Fredrick James have provided Tampa Bay and Clearwater, FL new business start up help to many, now successful, businesses. Won't you give us the opportunity to help you too?

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