Business Formation - PazTax LLC
New company formation process:
Select a business structure that best fits your needs by evaluating tax advantages, ease of operation and portability should you need to relocate (read below: Choosing a Business Entity)
Prepare and file application for State Incorporation or Organization.
Prepare and file application for Federal Employer Identification Number (Tax ID)
Corporate kit, includes:
Minutes and Bylaws: your personalized binder will include 50 printed minutes and bylaws or an operating agreement
Prepare and file application for S-corporation election for LLC or Corporation, if applicable
Prepare and file application for Sales Tax certificate, if applicable
When you decide to start a business, one of the most important decisions you’ll need to make is choosing a business entity. It’s a decision that impacts many things–from the amount of taxes you pay to how much paperwork you have to deal with and what type of personal liability you face, and with the passage of the Tax Cuts and Jobs Act of 2017, it’s more important than ever to choose the business entity that benefits your business.
Taxation of both the entity itself on the income it earns and the owners on dividends or other profit participation the owners receive from the business. C-Corporations fall under this system of federal taxation.
“Pass through” taxation. This type of entity (also called a “flow-through” entity) is not taxed, but its owners are each taxed (more or less) on their proportionate shares of the entity’s income. Pass-through entities include:
A Limited Liability Company (LLC) is a business structure allowed by state statute. Each state is different, so it’s important to check the regulations in the state you plan to do business in. Owners of an LLC are called members, which may include individuals, corporations, other LLCs and foreign entities. Most states also permit “single member” LLCs, i.e., those having only one owner.
Generally, an S-Corporation is exempt from federal income tax other than tax on certain capital gains and passive income. It is treated in the same way as a partnership, in that generally; taxes are not paid at the corporate level. S-Corporations may be taxed under state tax law as regular corporations, or in some other way.
Shareholders must pay tax on their share of corporate income, regardless of whether it is actually distributed. Flow-through of income and losses are reported on their personal tax returns, and they are assessed tax at their individual income tax rates, allowing S-Corporations to avoid double taxation on the corporate income.