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Creative Tax

Entity Formation

Plan to raise money from outside investors The stricter formalities give investors the knowledge they desire about how your company is run.
Plan to go public in the future Are you shooting for the stars for a big exit?

If a business operates as a corporation, the business owners, called shareholders, are not personally liable for debts or other claims against the corporation. That's because the corporation is a separate legal entity from its owners. If a corporation complies with the formalities required for it to be treated as a separate legal entity, then anyone seeking to collect a debt from, or enforce a claim against, a corporation, would not be able to collect from the shareholders themselves. They would only be able to pursue the assets held in the name of the corporation.

The IRS allows corporations to choose to be taxed as either a "C corporation" or an "S corporation." Income from C corporations are subject to double taxation; that is, the corporation pays taxes on its net income and then the shareholders also pay taxes on the income that they receive from the corporation.
S corporations have only one level of taxation. The shareholders still have to pay taxes on money that they receive from the corporation, but an S corporation does not pay taxes on its net income. While the S corporation is popular among small business owners, C corporations have greater tax planning flexibility.
Fewer formalities and legal requirements For example, you don't have to hold board meetings or maintain records detailing how every company decision is made. A limited liability company, or LLC, is a business entity created under state law that combines characteristics of both a corporation and a partnership.
Like a corporation, the owners of an LLC are generally not personally liable for company debts. Like a sole proprietorship or a partnership, an LLC has operating flexibility and is, by default, a "pass through" entity for tax purposes. This means that the LLC does not pay taxes on its profits, but instead, profits and losses are "passed through" to the owners, who must then pay tax on their share of LLC income.
A Nonprofit corporation is a special type of corporation that has been organized to meet specific tax-exempt purposes. To qualify for Nonprofit status, your corporation must be formed to benefit: (1) the public, (2) a specific group of individuals, or (3) the membership of the Nonprofit.

Examples of Nonprofits include: religious organizations, charitable organizations, political organizations, credit unions and membership clubs such as the Elk's Club or a country club.
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