So you want to start a business. And you’re not sure whether you are a sole proprietor, LLC, or S-Corp, Confusing? Maybe. Basically what it boils down to is taxes. How your business is set up determines what you pay in taxes, what tax breaks you may receive, and how your business is protected by law.
Sole Proprietor
Typically if you are the only employee and your business is more of a
LLC
Limited Liability C is popular because of its simplicity and flexible structure that protects your personal assets from the business’s liabilities. LLC’s are also a favorite because you don’t need a board of directors to run your business. However, to stay in compliance you will need to file annually and pay fees to avoid going inactive within your state.
S-Corp
Okay now maybe you’ve outgrown your LLC and it’s time to scale your business and pay yourself and perhaps a few employees. S-Corps are a tax classification and can be structured to avoid paying double taxes on profits.
C-Corp
A tad bit more complex in structure and are liable for double taxation however have fewer restrictions and are more flexibility than an S-Corp.
Why you need a CPA
CPA’s give great tax advice and can help your business stay in compliance. Unless you’re an expert on tax laws, I recommend you invest in hiring a CPA. Plus, nobody wants to pay extra in taxes and possibly fees for filing incorrectly or missing important deadlines. You are running a business, and are learning so much that you may forget a deadline or put money aside for tax time.
CPA or Accountant? Accountants can prepare your taxes but CPA’s have more knowledge of tax laws that seem to change every year.
What is a Registered Agent?
Having a registered agent is required by all 50 states to handle the filing all your documents. You can appoint a member from your LLC to serve as your registered agent OR you have the option to hire an registered agent who will receive and file documents on your businesses behalf.
For more information
