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Corporation, LLC and Partnership Formation

Business Entity Formation Services

Business formation is a necessary step when opening a business and makes the business a distinct legal entity. There are four main types of business formation options: Limited Liability Company (LLC), partnership, sole proprietorship, and corporation.

Whether you choose to be a Corporation, an S-Corporation, a Partnership, a Limited Liability Company or a Sole Proprietorship, your choice will have tax and business implications.

The business structure you select will not only determine who will be taxed and how, but it also determines liability and record-keeping.

To avoid potential pitfalls in the future, it’s important to set your business up correctly from the start.  Having a CPA who is well versed in business entity formation is truly invaluable.

At Cappelle Accounting, we will take all the factors that need to be considered into account, discuss your options with you, and determine which entity will be the most beneficial for your specific, unique situation.

Factors to Consider When Choosing a Business Entity

A business entity is created for an organization’s tax and legal purposes.  The entity selection can have major impacts down the line, both positive and negative.  Some factors to take into consideration when making your selection are:

  • Ability to Raise Capital – how you raise capital is subject to significant regulation, depending on your chosen business entity.
  • Personal Liability – Separation of Ownership and Management
  • Cost of formation and ongoing administration of each structure.
  • Business Tax Filing Requirements – The different tax liabilities that exist in each structure.
  • Transferal of Ownership – What you want to happen to the business when you are no longer able or around to run it.

The Pro's and Con's of Different Business Structures

Business StructureTax ProsTax Cons
Sole-Proprietorship-Pass-Through Entity
-Easy, Inexpensive to set up -Minimal reporting requirements
-No corporate business tax
-Unilimited personal liability
-Difficult to get business financing
-No Perpetual Existence
Partnership-Pass-through entity
-easy/inexpensive to set up
-Unlimited personal liability (dependent on partnership classification)
-No perpetual existence
-Must create an partnership agreement
Limited Liability Company (LLC)-Flexible management structure -No corporate business taxes
-Flexibility to choose tax structure
-Limited liability
-Not recognized outside the U.S.
-No perpetual existence
-Not recognized on a federal level – dictated by state statute
S Corp-Pass-through entity
-Perpetual existence
-No corporate taxes
-Only 100 shareholders permitted
-Strict qualification standards
-Only recognized inside the U.S.
-Not recognized by all states
C Corp-Unlimited number of shareholders
-Preferred for IPO and outside investors
-Perpetual existence
-Limited liability
-Double Taxaction
-More difficult and expensive to start
-Increased regulation and oversight

Get Business Guidance and Support

Once you have established the way in which your business will be run, you will need to construct a business plan.

As each type of business structure has different tax reporting responsibilities, Cappelle Accounting can guide you in the best way to make certain you meet all of the requirements in a timely manner.

We are here to guide you through this process, ensuring your business benefits from it's structure and maximizes it's profits.