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Choosing Financial Structure for Your Startup

payfiz Breaking Down: Business Formats .comâ„¢ Presents: Financial Aspects A Sole Proprietorship is the simplest form of business that requires very little work to set up. SOLE PROPRIETOR S CORP C CORP LLC GENERAL PARTNERSHIP LIMITED PARTNERSHIP Limited Liability Company The most flexible form of biz, combin- ing protection of corporate form with the single tax of partnerships. It's easy to set up and can be managed by mem- bers and employees. General Partnership An agreement between two or more people to share in the profits and losses of a business, which pass directly to owners so its taxed Like a GP, but with an additional type of owner, the Limited partners, who are protected from Liabilty but don't manage the business. Refers to Subchapter S of the tax code, which allows an S A standard format Corporation to avoid double taxation. that earns and exists only once. outside of its owners. LLC GP LP S Corp C Corp Cost to Form & Maintain HIGH costly to form HIGH costly to form minimal paperwork minimal paperwork MED moderate paperwork extensive legal and accounting records required extensive legal and accounting records required no business tax must prepare annual 5 income statement must prepare annual income statement return needed Investor Friendly ability to money and assign control only common stock, no preferred stock HIGH flexible growth and fundraising by issuing shares no stock to issue MED MED Limited ability to LOW control investors Limited to 75 owners can't adjust share - can't adjust share of income distribution of income distribution board of directors board of directors E flexible distributions to investors Eto investors represents investors represents investors Taxation of business income and owners' personal income BIZ BIZ TAX TAX TAX pass-through by default (can choose to be taxed as corporation) pass-through (owner tax only) pass-through (owner tax only) pass-through (owner tax only) 2x corporate taxes & owner taxes a TAXED entity a PASS-THROUGH entity TAX %$4 tax paid owner owner income salary net income & salary double tax dividend BIZ taxed once at company level and again at owner level earnings Don't let choosing a business format slow you down... make the best decision you can and keep moving! Sponsored by: payfem. e Ewing Marion e KAUFFMAN .com" f Foundation Fund your dreams.

Choosing Financial Structure for Your Startup

shared by ptvan on Apr 15
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Understand the differences between sole proprietorships, LLCs, and corporations, including cost to form and maintain, ability to attract investors, and taxation.


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