How Do I Decide What Entity Suits My Business The Best?

It is easy to fill out a Tax ID application.  Just go to https://www.govdocfiling.com/and complete the application, and you will have an email confirmation with your EIN in one hour.  The most difficult part of applying for a business Tax ID is deciding which entity type you want for your business.  Here are some facts about different entities so you can choose which one is right for your company:

Limited Liability Company (LLC)

Entrepreneurs who choose an LLC as their business entity type do so because an LLC offers the best of both worlds.  It is subject to pass-through taxation, which means that it has no taxes at the corporate level.  It is also an attractive choice because it helps business owners protect their assets.  The IRS cannot personally hold you responsible for the debts of your LLC.

S-Corporation

Like an LLC, an S-corporation enjoys the benefits of pass-through taxation.  It also offers flexibility, because it is easy to add and remove shareholders from the company.  People who choose the S-corporation entity type usually do it because it lets them avoid double taxation.

C-Corporation

Any nationally known business you can name is probably a C-corporation.  C- corporation is the appropriate designation for big businesses because it allows for unlimited growth of the business.  Businesses in the financial sector also tend to be C- corporations, even if they are small businesses.  If you own a C-corporation, you still have to pay both business taxes and personal taxes.  The C-corporation entity type does allow you some protection from the liabilities of your business.

Before you apply for a Tax ID for your business, think carefully about your choice of entity type.  It is difficult to change the entity type once you establish the business.

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