In last week’s post we discussed the differences between sole proprietorship, partnership and limited liability corporations. This week Schwartz, Fang & Keating, PC, Long Island’s leading law firm will continue with the benefits of different corporations and what to consider when starting a business. Our attorneys are proficient in corporate and business formation as well as, probate, estate planning, will drafting and trust drafting. We will conclude our two part post with more information pertaining to the benefits of both S and C corporations.
The benefits of incorporating, whether as an LLC, S Corp, or C Corp are plentiful. By incorporating, you give your business another level of credibility. Depending on your line of work, this extra credibility can be what people see as a defining factor in working with you. For instance, you would be more likely to call a painter that operated a corporation vs. one who only operated as a DBA—Why? Trust, liability to your home, and personal feelings associated positively with someone who is more ‘set up’ and ‘serious.’ Additionally, corporations, as opposed to sole proprietorships or partnerships, have more tax benefits such as savings on self-employment taxes and health insurance premiums.
S Corporations, generally speaking, hold great benefits for people who are classified as corporations. S Corps are business that have been incorporated and file their taxes under the designation of an “S Corp.” In order to classify as an S Corp a special form must be filed with the IRS. The major benefit to classifying your business as an S Corp is that it changes the business into a pass-through agency. This means the business itself is not taxed on its profits. The only income that is taxed through the business is salary and shareholder profits, both taxed as personal income. To ensure that your business is classified with the tax designation that best benefits you and your family, contact the lawyers at Schwartz, Fang, and Keating, PC today at (516) 488-0100.
Corporations are defaulted as “C corps” within their tax designation. With this form of corporation any money left in the business after salaries and expenses are paid is taxed at the end of each quarter/year depending on when you file your taxes. When shareholders are paid they will have to pay additional personal taxes. This is considered to some “double taxation,” any many businesses wish to avoid this.
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Contact us today to turn your dreams of financial freedom and self-employment into a reality! Live your passions with your best foot forward: making the smart business decisions for the future of you, your family, and your business. We can help you plan out the best way to start your business and help you fill out and file your Partnership, LLC or Corporation paperwork. Our New York state attorneys are experienced with working with new business owners to get you exactly what you need.