News for America's Business Owners: Understanding a LLC, LLP and Partnership When Newly Incorporating  

Having served as a CPA in Metro Atlanta for decades I frequently have the opportunity to sit down with a new business owner who had been blessed to be fairly profitable in a very short amount of time. However, for convenience when the business was originally incorporated they did not take the time to sit down with a Certified Public Accountant to discuss the tax nuances of different entity structures. Understanding these differences is essential to wise and prudent entity and tax choices.  

Limited Liability Corporations, Limited Liability Partnerships and General Partnerships

An LLC, LLP and Partnerships are all taxed in the same manner. Selecting one of these types as a business entity would be a poor selection for a business such as a print shop, as they will all result in higher taxes with no additional advantages for the printer.

It is useful to develop a mindset that if you do not need to be another entity type then you need to be an S Corporation. For example, generally speaking a printer that was an LLC, LLP, or Partnership will pay higher taxes with no additional advantages as opposed to being an S Corporation. A Limited Partnership is also an option that could be explored when certain partners want to limit their liability and exposure.

Here are some of the reasons you might want select an LLC or LLP as your entity choice:
If you are a lawyer or physician's practice then all of the partners' personal assets are at risk if one partner does something wrong, while if an LLC or an LLP, only the offending partners personal assets would be at risk. This is because of the professional service statutes for these types of professionals, but these rules do not relate to our printer.

If you are a real estate developer and you had a piece of land that had dramatically increased in value, you can transfer that property to an LLC, LLP, or Partnership without having to pay any capital gains tax. Also with these entity types, you can take shareholder distributions that are not based upon ownership, whereas in an S or a C Corporation they have to be. Again, this does not relate to our printer client.

To read more on these issues see:

Choosing an Entity Type for Your New Business
Your initial choice of entity is perhaps the most important tax, financial and legal decision you might ever reach. Being well versed in these areas is essential to a wise and prudent decision. See http://www.hiscpa.com/article2.html

Determining How Your New Business Will Be Taxed: Effects of Entity Choice
Carefully considering the tax effects of your entity choice is essential to getting your business off on the right foot. Being careful to avoid, if at all possible, the double taxation of C Corporations and then selecting the right entity for your business from both a tax and legal perspective is critical. Visit http://www.hiscpa.com/article2.html

Getting Your New Business Started
Understanding many of the basics of the start of the incorporation process will do much to ensure that you are well-versed and able to make wise and informed decisions. As these issues will affect your business operations and finances during the lifetime of your business they are essential to getting started well. Go to http://www.hiscpa.com/incorporating-guide.html  

Determining Where Incorporate Your New Business
The decision of where to incorporate your business is a critical component of getting your business started. Learn what you need to know to make a well-informed decision. See http://www.hiscpa.com/incorporating.html

Corporation Forms and Registrations Checklist
Whether you are just incorporating or have been in business for years. This summary will enable you to quickly locate the forms and guidance you need to ensure your business maintains tax compliance. Visit http://www.hiscpa.com/checklist.htm

Incorporating Your Issues for Your New Business Leadership
Knowing who will lead your business, their morals, beliefs and work ethic are essential to success in your new business venture. Determining who should be at the helm and who should follow will do much to avoid needless delays and time lost in aimless decision making. http://www.hiscpa.com/business-leadership.html

Incorporating the Details for Business Owners
Learning the basics of incorporation will do much to ensure that you do not make a costly mistake. Discovering the details of what all is involved in your new Georgia business will much to ensure you avoid costly mistakes and blunders. http://www.hiscpa.com/incorporating-details.html

Dare to Attempt Something so Great for the Kingdom of God that it is doomed to failure, lest Christ be in it!  

John Dillard is an Christian Speaker/Author and Certified Public Accountant in Duluth, GA. To See how he takes Christ along with him to work visit http://www.hiscpa.com/ and for his latest book Overcoming Life's 9/11's: Job's Journey and a Voice of One: Nehemiah's Prayer visit http://www.john-dillard.com/ or call John Dillard CPA today at 770.814.9304 (All Rights Reserved)