One of the first decisions when starting a business or creating a subsidiary or affiliate to an existing business is to determine the type of entity that is most appropriate for both the owner(s) and the enterprise. There are several tax and non-tax considerations that should be contemplated. As for tax strategies, in many instances it is desirable for a business to be taxed as a pass-through entity, such as a partnership or S corporation. However, there are still situations where taxation at the corporate level (e.g. a C corporation) may be warranted and necessary. To reach the right result, an analysis into the owner’s effective tax rate, character, and timing of the income that will be recognized, along with exit strategies, must be undertaken. Non-tax considerations include, but are not limited to, ease of formation, governance requirements, legal formalities, restrictions on the type of owners, liability protection, and desirability for future investors.
To best build an appropriate business foundation and tax strategy, it is necessary to understand the foregoing and all other relevant facts and circumstances of each business, as well as those pertaining to individual shareholders or partners. We have the experience necessary to mine this information and assist you in properly choosing the right entity and tax structure to meet your needs.