There are several types of Business Entities and each has its own legal and tax
return requirements. Some tax laws/rules are the same for
corporations, partnerships, limited liability company, or sole
proprietorships, while others are entity-specific. States and Local jurisdictions, such
as counties and cities, may have their own regulations and taxes, as well. A
person is a member of an LLC, a partner in a partnership and can be an
officer, director, stockholder or employee of a corporation.
A business entity must be chosen before beginning a business if more
than one owner is to be involved. Invest in consultations with both a
lawyer and an accountant before choosing a business entity.
Be sure to ask questions so you fully understand your obligations and
potential liability. Your choices are important and will
make a difference!
you are chosen for a tax audit, it is important to realize you may need
to prove your expenses were necessary and customary for your business.
You may need to provide records that substantiate the business income
you reported. Be sure your records will stand up to scrutiny.
The following links provide a brief summary of the different types of
business entities and other issues of interest to business owners.
Also, link to our favorite
Business Tax Tips directed
to entrepreneurs and business owners.