entity choice

As your business grows, sometimes the character of the income you earn changes. This is especially true if you are looking to make the move from actively working in your business to having it passively run by itself, without your daily involvement. But if you don’t keep an eye on your business tax status you could find yourself paying far more in taxes than you need to!

I normally don’t like to recommend sole proprietorships to my clients as working business solutions. I hate the additional liability that they create, and from a tax perspective they don’t make a lot of sense, either. You’re looking at paying a 15.3% self-employment tax on all your income, which can be cut in half just be switching to a corporation. But every so often a situation comes up where using a sole proprietorship can work to your advantage.

The two trickiest times for a new corporation are (1) at the beginning and (2) at the ending. Do you know how to transfer your business assets into a corporation inthe best possible way?

The right business structure saves you taxes and protects your assets. The wrong one costs you eve MORE taxes and puts your assets at risk. One of the saddest things I’ve ever seen in my 25+ years in accounting is seeing someone lose everything they own because of a business structure mistake.