Tax Services > Entity Structuring

Entity Structuring

What is Entity Structuring? 

Entity structuring is the process of assessing a businesses’ operation, ownership, and goals, with the objective of determining which entity structure fits it most optimally. Tax, legal, and the investment components of an enterprise are all taken into consideration. An optimal entity structure will optimize after-tax profits and provide liability protection for its owners.

What are the advantages of Entity Structuring?

Because there are many ways in which both new and existing businesses can be structured (i.e. C-Corp, S-Corp, Limited Partnership, Limited Liability Company, Sole Proprietorship), finding the right fit ensures the enterprise can operate to its highest potential. The industry in which a business operates, the product and/or service it delivers, and the market that it targets, all serve as factors that influence the structure of an entity. Furthermore, these factors influence how the entity handles liabilities, plans for taxes, and capital.

Who qualifies & why should you adopt?

Both new and existing businesses qualify to execute entity structuring. Amongst other advantages, businesses may be able to avoid having their owners pay certain taxes by electing a new structure. For example, an LLC could elect S-Corporation status and exempt its owners from paying self-employment taxes on their individual income tax return. Whereas, a General Partnership could switch to an LLC in order to relieve (to a certain degree) its owners from the businesses’ debts and obligations. As tax laws change and adapt over the years, it can make sense to change the existing entity to another structure.

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