Services -- business


There are many different types of business entities. Each has its own unique benefits and drawbacks.

 

Select from the list below, which business type you are interested in to learn more about the benefits & drawbacks.

Proprietorships

Benefits

  • Easy to form
  • Inexpensive to start and operate

Drawbacks:

  • Full legal liability
  • Pays self employment taxes on the business net income

Partnerships

Benefits

  • Sharing of responsibilities.
  • Partners pay income taxes on the profits of the partnership on their personal income tax returns.

Drawbacks:

  • Full legal liability for own and other general partners' actions.
  • Pays self employment taxes on the business net income in addition to income taxes.

Limited liability companies

Benefits

  • Personal liability limited to investment in most instances.
  • Election can be made for income to be taxed as a Partnership, Corporation or Proprietorship.
  • Only entity which may have foreign interests and allow pass through of income—and taxes—to members.
  • Best income tax planning alternative of all entities.

Drawbacks:

  • More expensive to form and operate than a proprietorship or partnership.

corporations

Benefits

  • Personal liability limited to investment in most instances.
  • Corporation may elect to be taxed as a pass through entity paying no income taxes to either the state or federal governments.

Drawbacks:

  • If election is not made to be taxed as a pass through entity, the corporation pays both state and federal income taxes.
  • Shareholders are taxed again on the profits when distributed.
  • More expensive to form and operate than a proprietorship.

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