Choice of Entity Planning: Choosing the right entity is not only important for asset protection, it is very important for tax purposes and tax planning. Entities can be taxed differently. For example, a Corporation that has not made a "S" election has to file a Form 1120 and that Corporation is taxed and pays its own taxes; wherein a Corporation that has made a "S" election files a Form 1120-S and does not have to pay taxes because any income or losses flow through to the shareholders or members who therein pay the taxes based on their share.
An LLC can file a separate return, if more than one member and not husband and wife typically, whose income flows through to its members. As such, it is very important to meet with a competent tax professional to get proper advice when choosing what business structure to form when starting a business.
Choice of Entity Planning