One of the most common questions we get at USTaxAid is, “What’s the best business structure for me?”
Here are some questions that you need to answer first.
- Will you hold assets that you expect to appreciate? If that’s the case, you’ll want a single-member or multi-member LLC that takes a disregarded tax status. The corporation is not your friend.
- If you have real estate, are you planning to flip it, wholesale it or otherwise hold it for a short term? If that’s true for you, you probably want to use an S Corporation, assuming you qualify.
- Will there be any partners that are foreign nationals? If so, you can’t use an S Corporation. Depending on what you’re doing and what country they are from, you will want to use a limited partnership, LLC or C Corporation.
- Do you expect to take your company public? You need a C Corporation to go public.
- Do you provide a professional service through your company? You probably want to avoid the C Corporation because you might get hit with the professional service corp penalty. The S Corporation is usually the best.
- Do you need to take advantage of C Corp-only benefits like Medical Expense Reimbursement Plan? Check first to make sure the C Corp is the best for other reasons, but if you need good benefits the C Corp might be best for your business.
The right business structure will protect your assets and save you on taxes. The wrong business structure can be a nightmare that costs you time and money. Check with an experienced CPA before you make the final decision.