Curcuru & Associates CPA PLC, a Farmington Hills accounting firm has helped many businesses simplify the incorporation and business formation process. Below are some popular entity types for businesses. Each entity selection choice has tax advantages and disadvantages that must be considered before making a decision for your business. We invite you to call us at 248-538-5331 and we'll help answer your questions about how to minimize your taxes and incorporate your business.
Limited Liability Company (LLC)
An LLC must file Artcles of Organization with the Secretary of State in order to be formed and it requires an organizational agreement similar to a partnership agreement. The owners or members of the LLC are shielded from personal liability for the obligations of the LLC. The LLC may be taxed as a partnership so income and deductions are reported by its members on their respective individual income tax returns.
A corporation is a separate legal entity. Its owners or shareholders have no personal liability for the obligations of the Corporation. The disadvantage of a traditional corporation (C corporation) is double taxation since tax is both paid on corporate income and again when shareholders pay income tax on dividends.
To avoid double taxaction, corporations that qualify make a special S election to be taxed only once. These corporations are known S corporations.
Call us at 248-538-5331 to help you determine the best structure for your business.