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Which Entity Is Best For Your Company When starting a new business, an owner is faced with a very important decision. What form of entity should my business operate under? The answer is not always clear and will require some careful thought. Let’s start with the basic question... What are my choices? The general choices are: A regular or C corporation An S corporation A limited liability company (LLC) A limited liability partnership (LLP) A general partnership A limited partnership A sole proprietorship All states now recognize LLPs. Some states allow one-member LLCs or have special entity types for professional, such as ... Read more |
Ready... Set... Grow... Growing a business is not a sprint. It’s a marathon baby, a long distance adventure that demands focus and determination, requiring much more than increasing your sales. As a business breaks out of its “small business” shell, a paradigm shift must occur in the business owner’s mind if the business is to flourish. Thinking only about today is no longer an option. Business owners are faced with a whole new level of challenges and they need answers to questions such as: Is the business headed ... Read more |
Your business is talking. Do you understand what it’s saying? Profitability is very important to business owners and they look to their CPA for guidance on how to improve it. Accurate financial statements are necessary, but that is just the beginning. CPA’s have a responsibility to guide business owners towards profitability. A good CPA does this by getting the financial statements to talk to you. The best way to make that happen is to create benchmarks to compare against your actual ... Read more |
What's a Reasonable Salary? The instructions to the Form 1120S, U.S. Income Tax Return for an S Corporation state that "distributions and other payments by an S corporation to a corporate officer must be treated as wages to the extent the amounts are reasonable compensation for services rendered to the corporation." The Internal Revenue Service has the authority to determine what a reasonable salary should be. As a result, if a salary is not taken, the IRS can deem a portion or all of the distributions taken as taxable, reclassify ... Read more |
Excess Distributions Tax consequences of “Excess Distributions” for S Corporation shareholders The “S “ election for corporations has some definite tax advantages. The election allows shareholders to report the corporate income and deductions on their personal returns. These items are taxed at the individual’s income tax rates, which are typically lower than corporate tax rates, and avoids double taxation on the corporate income. In addition, non-dividend distributions can be taken free of dividends tax as well as self-employment tax (Which is a social security and Medicare tax primarily for ... Read more |
The Importance of HR Practices Today’s economy has forced business owners to re-evaluate all aspects of their operations. Internal systems are reviewed, inventory controls are implemented, sales and marketing strategies are revised and overall productivity is analyzed. With so many areas to examine and fine tune, many companies overlook one of the largest components of their organization-their human capital. Evaluating human resource practices is essential to the infrastructure, productivity and future success of the ... Read more |
How Much Is Your Business Worth? Why do you need a business valuation? The prospective sale of the company might seem to be the obvious reason for getting a business valuation, but there are many other reasons as well. They include: Estate, gift and trust planning – To determine estate taxes, a value must be placed on all assets which includes the business. Buy/sell agreements – A buy/sell agreement is an understanding between shareholders of a closely held business that specifies the terms and prices of a buyout when one or more shareholders want ... Read more |
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