We provide federal and state tax return preparation, tax planning, tax projections, and tax consultation services for businesses.
In addition, we provide business entity choice consultation. Selecting the correct business structure is a one of the most important decisions facing business owners. Each structure has different legal and tax consequences. No single structure is appropriate for every business or owner. We can help you choose the right structure based on your needs and plans for the future.
Sole proprietorships are reported as self-employment income on a Schedule C as part of your individual Federal Tax Return. Net income from sole-proprietorships is subject to self-employment tax in addition to income tax.
Partnerships are reported on a Form 1065, U.S. Return of Partnership Income. However, they are conduit entities that are not taxed at the entity level. Instead, the income “flows-through” to the individual owners, via a K-1, and is taxed on their personal returns.
Limited Liability Companies
Limited Liability Companies are allowed by state statute and are not recognized by the IRS as a separate taxable entity. Instead, the IRS has default classifications for LLCs depending on the number of owners in the LLC. If the LLC has a single owner- commonly called a single-member LLC- the IRS considers the LLC a “disregarded entity.” Disregarded entities are reported on the single member’s personal income tax return, as if it was a sole-proprietorship. If an LLCs has two or more owners- a multi-member LLC- the IRS classifies the LLC as a partnership for income tax purposes.
S Corporations are reported on a Form 1120S, U.S. Income Tax Return for an S Corporation. S Corporations are conduit entities that are not taxed at the entity level. Instead, the income “flows-through” to the individual owners, via a K-1, and is taxed on their personal returns.
Corporations are the only business entities that are separate taxable entities. Corporations file Form 1120, U.S. Corporation Income Tax Return and pay tax on earnings using corporate tax brackets.