Electing the correct business entity
Choosing the right entity is an important first step in starting a business. Under the best circumstances, the entity type should have been considered and created prior to the start of business and before acquiring assets and capital. There are many factors to consider in choosing the right entity. Some of these factors include:
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Will the business sustain losses in the early years; |
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Will the business be sold in later years |
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What is the management team and structure |
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Is stock based compensation a possibility |
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Liability issues and protection |
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Tax brackets of the owners |
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Single as opposed to multiple owners |
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Allocation of income |
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Passive investors |
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Debt leveraging versus capital |
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Multiple store locations |
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Transfer of interest to family members |
Discussing with your CPA your business situation and specifics is vital prior to the beginning of business.