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tax entity structures, tax entity structure

Tax entity structures in florida

If you’re first starting to think about starting a business, there are a variety of issues that can be difficult to understand. Fortunately, the experienced legal team at Capital Partners Law is here to provide the assistance you need every step of the way. Here are some tax entity structures you should consider when forming a business: 

Common Business Structures 

Sole Proprietorship 

Sole proprietorships, where one person forms an organization and retains complete control, is by far the most common type of business structure. A sole proprietorship is straightforward and easy to form. When you are conducting business activities, but fail to register any other form of business, you are automatically considered to be operating a sole proprietorship. 

If you are considering forming a sole proprietorship, it is critical to understand that these entities do not produce a business entity separate from your personal assets. This means that the person establishing a sole proprietorship business entity can be held personally liable for the obligations and debts of the business.  Sole proprietorships may also struggle to raise capital, as many lenders may be wary of lending, given the risks associated with this type of business entity. 

Partnership 

Partnerships involve two or more individuals coming together and forming a business entity, with the understanding that they will share in both the profits and the losses of the business. Partnerships are advantageous for businesses, as they allow the partnership to avoid the tax burden of profits or losses, as they are “passed through,” meaning the partners are able to report them on their own income tax returns.  The primary disadvantage of partnerships is that, like with sole proprietorships, both partners are usually liable for the losses and financial obligations of the business.  

Corporation  

A corporation is another common business structure.  When created, the corporation becomes an entity which is separate from both those who founded it and those who handle it’s day to day responsibilities. In essence, a corporation becomes legally similar to an individual. Therefore, just like a person, a corporation is taxed and held liable for its actions. 

The primary advantage of forming a corporation is the ability to avoid personal liability for the actions or obligations of the entity. Conversely, the major disadvantage of a corporation is the need for meticulous record-keeping for taxation and liability purposes.  

Limited Liability Corporation 

Limited Liability Companies (LLC) are a popular form of business entity as it affords owners the benefits of both a partnership and a corporation. LLCs are a great choice for a business structure, as they allow profits and losses to be passed through to the owners without taxation of the entity, while also providing the owners a measure of protection form the liabilities and obligations of the entity.  

Contact the Experienced Corporate Law Experts at Capital Partners Law Today 

At Capital Partners Law, we have a combined 15 years’ experience in corporate and business law. We provide our clients with tailored representation to help get the business results they are looking for. We are well-versed in all aspects of business law including tax entity structures and can provide you with the assistance you need to succeed. So, if you are looking for a business law firm as dedicated to your success as you are or to inquire about our other services, contact our team at Capital Partners Law today.

What Should You Do Next?

If you are interested in learning more or speaking with an attorney at Capital Partners Law, there are plenty of ways to get in touch:

This article is for informational purposes only. It does not create an attorney-client relationship with any reader nor should it be construed as legal advice. If you need legal advice, please contact our firm.