Choosing a Business Entity

When beginning a business, you must decide what form of business entity to establish. Your form of business determines which income tax return form you have to file. The most common forms of business are the sole proprietorship, partnership, corporation, and S corporation. A Limited Liability Company (LLC) is a relatively new business structure allowed by state statute.  Specific circumstances must exist and certain regulations must be complied with for an entity to be approved as an organization exempt from federal income taxation.

Legal and tax considerations enter into selecting a business structure.  The following links to IRS data explain basic differences in these types of operating entities from a federal tax perspective:

  • Sole Proprietorship                                 IRS Information on Proprietorships
  • Partnership                                                 IRS Information on Partnerships
  • Corporation                                                IRS Information on Corporations
  • S Corporation                                             IRS Information on S Corporations
  • Limited Liability Company (LLC)      IRS Information on LLCs
  • Nonprofit Organization                          IRS Information on Nonprofit Organizations

Information accessed via these links provides an overview of entity options for a new business.  Legal counsel should be consulted regarding the specific legal advantages of one of these forms of operating entities over another.

For assistance in determining and comparing the tax advantages and disadvantages of each of these forms of business ownership, please  refer to the contact information listed under CONTACTS on this blog to speak to a firm representative of Roy & Associates, PCWe welcome new business.

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Roy & Associates, PC serves clients in western Pennsylvania located predominantly in Westmoreland County, Allegheny County, and Fayette County.