If you’re planning to get a new business structure in place before year-end to save on taxes, start early this year. We’re seeing wait times as long as 4 months to get entities set up in states like California already.
Typically, we’re looking at last minute business structures for:
* Sole Proprietorships who are tired of paying more in taxes, facing higher audit risk and huge total liability.
* Business owners with taxable income greater than $250,000 who want to legally save an immediate $15,000 or more in taxes.
* Real estate investors who need to separate out passive and active real estate ventures for more strategic year-end planning.
In normal years, it takes longer to get new structures set up near the end of the year. There is always a last minute rush right at the time when many state government employees are taking time off for the holidays. Typically, we tell our clients that we need to have the paperwork submitted by 12/1 to ensure an entity before year end.
This year isn’t a normal year.
For 2009, you should have paperwork submitted by 10/1 at the latest. If you mail in paperwork as opposed to hand deliver which we suggest, you’re probably already too late. That’s because most states have already experienced shortened work weeks and lay offs. They are seriously understaffed and we’re just about to come into the busy time for them.
This is one year when you need plenty of time to implement your tax plans. If you wait too long, you’ll pay much more in taxes.