Our objective here at DMMI Associates LLC is to get good, timely information into your hands. No wheel reinventing here today, simply some justified kudos.
This is the best 2-minute summary that we've ever seen on how your business structure choice can drive your income taxes up, or down. "Is Your Structure Costing You Money?" produced by Entrepreneur Magazine's Video Network. The video provides an overview of tax implications to consider.
Fair warning: it's preceded and followed by about 15 seconds of commercial advertising. They have expenses and production costs, too!
Your business will be one of the following types, even if by default.
- Sole Proprietorship. – It's all on you: what you do, how you do it, along with all the liabilities. Income is taxed directly to you, as an individual.
- Partnerships can be two or more business owners, splitting everything evenly, or in different proportions according to a written partnership agreement.
- Limited Liability Corporations - LLCs are supposed to do just that: limit your liabilities. The recommendation offered in the video is right on target.
- A Sub-chapter S Corporation or "S Corp" was the original hybrid corporation, but proved a bit cumbersome for many small business owners. The LLC was borne as a result.
- C Corporations are the more classic structures that we know Big Business by. Your company doesn't have to be big to use it. The choice just needs to make sense from a net earnings perspective. There are LLCs with hundreds of employees, for example. The choice was driven largely by the tax numbers.
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