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Choosing the Right Business Entity

Many entrepreneurs get stuck and confused when trying to select their perfect business entity S-Corp, LLC, Sole Proprietor… It can all be overwhelming and because of that, many business owners overpay the alphabet people (IRS) every single year; just by choosing the wrong entity for their situation.

The worst part about this is: official sources aren’t making things easier for us.

However, once you compare selecting your perfect business entity to purchasing a new car, it becomes much easier to understand. Here is what I mean:

Depending on your situation, you’re going to use your car for a couple of years… You have a budget range, a rough idea of the type of car and the features you’re looking for. At the end of the day, it’ll only be a tool that gets you from point A to point B… But depending on its features, your experience will vastly differ.

  • One car will get you there faster…
  • Another will get you there more comfortably…
  • While yet another one will be safest.

This is exactly how you should approach selecting your business entity! Your entity serves as a vehicle to give you the ideal business, according to your unique situation. While most entities can get you there…Only one of them will get you there fastest, most steadily and with the most amount of cash left in your pocket.

Here are 5 primary features to focus on when choosing your business entity:

1. Taxation
2. Costs to operate
3. Your liability protection
4. Fringe benefits, such as healthcare or retirement
5. Where you want to take your business in the future

Once you’ve become crystal-clear on these 5 criteria, selecting your perfect entity will become very easy. What comes next is the most crucial step for your business’ future; Maximizing your deductions.

We as business owners, even those with a small side hustle, benefit from many tax deductions W-2 employees don’t have access to. It is necessary to have plans in place to ensure that we are maximizing all available deductions. Always ensure that you work with a tax strategist to make sure you are properly setup to win the tax game!

This article carries no official authority, and its contents should not be acted upon without professional advice. For more information about this topic, please contact our office.