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What are Some Options for Forming a Business Entity?

On Behalf of | May 3, 2013 | Firm News

Starting a business generally requires business formation. Evaluating business entities and choosing the one that offers the most advantages require both business and legal knowledge. Florida business law attorneys can help you choose wisely and start your business off on the right step.

Depending on the nature of your business, you may be wrestling with whether to incorporate or select an entity that provides protection but does not involve double taxation. A C corporation has taxation at two levels: the shareholder level and as a business corporation. Until 1958, Americans had limited choices of business entities ― a sole proprietorship, a partnership or a C corporation. In an effort to reduce the gap between the handful of “Big Business” corporations and countless mom-and-pop partnerships, Congress created Subchapter S of the Internal Revenue Service (IRS) Code. This subchapter provided a model for small business incorporation, which became known as the S corporation. The S corp is a pass-through entity that allows shareholders to file personal income taxes and report their corporate income, deductions and losses as individuals. You have corporate liability protection but no corporate tax and, therefore, no double taxation. To form an S corp, your company must be a domestic business and have:

  • A limited number of shareholders (100 or fewer)
  • One stock class
  • Shareholders who are individuals, certain trusts and estates but not partnerships, corporations or non-resident alien shareholders

While the S corp is the most common business entity today, it is only one of a variety of business entities available. A Daytona Beach business law lawyer can help you evaluate your business and choose the entity most suitable for your goals.

Mara & Mara works closely with clients to provide guidance and help them protect their business interests.