Business Nuts & Bolts: Do it right so you don’t get burned Business Nuts & Bolts: Do it right so you don’t get burned Business structure & Taxation Presented By: Maria Hampton, Esq. Email: attymhampton@gmail.com Kristin A. Roberts, EA, ABD The Roberts Tax Group, Inc. www.rtg.tax

Structures to discuss Sole Proprietorship Partnership Limited Liability Company S-Corporations C-Corporations

Sole Proprietorship Legal No difference between you and your business You are entitled to all profits and are responsible for all business debt – unlimited personal liability Quick and cheap to form You have complete control over business Taxation You pay both portions of Social Security & Medicare = 15.3% Often required to pay estimated taxes Business & Personal taxes are not separate Hard to raise money Sole Proprietorship

Partnership Legal Two or more people Several Types General, Limited and Joint Venture Share ownership, profits and loss Quick & inexpensive to form Lack of complete control Liable for debt incurred by other partner(s) Disputes are common Taxation Business must file separate informational return You pay both portions of Social Security & Medicare = 15.3% Often required to pay estimated taxes Hard to raise money Partnership

Limited Liability Company Legal Mix between corporation and partnership Quick & inexpensive to form Limited liability to members Taxation Business may be required file separate informational return Options to tax as other business entities You pay both portions of Social Security & Medicare = 15.3% Often required to pay estimated taxes Easier to raise money Fewer restrictions on sharing profits Limited Liability Company

S-Corporation Legal Stricter operational processes More complex and costly to set up Limited liability to shareholders Taxation Shareholder compensation required No foreign ownership – less than 100 shareholders Profit/Loss pass through to Shareholders Can be a great source for tax savings compared to other structures Must first organize as C-Corp, then make S-election with IRS S-Corporation

C-Corporation Legal Separate legal entity from owners More complex and costly to set up Issues stocks Taxation Corporation is taxed on earnings Double taxation on dividends Less flexibility in accounting/tax matters Easier to generate capital C-Corporation