Houston Tax Consultants for Small Businesses
There are several important tax considerations to ponder for your small business, especially at the onset. From the moment you open your doors (or even before), decisions about your business structure need to be made that will impact your annual tax return and how you receive your profit. The first and perhaps biggest decision is how to classify your small business:
Sole Proprietorship: This is the most common and simple type of business classification. In this case, one single person owns the company and is both the owner of the profit/assets as well as the debt. From a legal perspective, there is no difference between the owner and the business. Profits and losses are reported on an individual’s tax return.
Partnership: Very similar to a sole proprietorship, but instead of one single owner, two or more individuals share ownership of the company. This means that they share the profits/assets as well as the debt. In a partnership, an informational tax return is completed and each partner discloses profits and losses on their own return.
Corporation: A corporation is different from a sole proprietorship and a partnership in that it functions separately from the owners of the business and can be sued or taxed. It is comprised of shareholders (partial owners) that have limited liability for the debt. Corporations are very complicated to set up and often require the help of an attorney and/or a tax firm.
LLC: A Limited Liability Company (LLC) is a cross between a corporation and a partnership. Each state may have different regulations that govern their LLCs.
S Corporation: Like a partnership, the profits and losses of an S Corporation are shared by the partners and the business itself is not taxed. Earnings each year can be included on a personal tax return but if there is profit, the partners must pay their own wages.
Deciding how best to structure your small business and anticipating the tax ramifications of this crucial, early decision are critical to the success of your business and have a significant impact on your tax return. If you have questions or want more information about the pros and cons for each of the structural options, you may consider contacting a knowledgeable tax firm for assistance.
Success Tax Relief is based in the Houston, Texas area and specializes in all types of tax support, including small business set-up. We have partnered with many small businesses in the Houston area and helped analyze their structure, goals and can help to make sure that your company is maximizing your tax situation. We have worked with thousands of customers over the last 30 years on a wide variety of tax related issues including routine tax preparation, negotiations with the IRS and audit preparation, giving us a very uniquely broad perspective that can help you and your business.Give our trusted customer service team a call today at 1-877-958-6638 to speak with someone 24/7 who can provide sound, reasonable and practical advice that will help you make the best decisions for your small business.