Incorporate Business MA | Corporation, LLC, or DBA?
Incorporate Business MA | Corporation, LLC, DBA may seem complicated for anyone starting a business. They are all great options but for tax savings and asset protection, one may be better. So, which one do you choose? We’ve simplified the differences and highlighted the pros and cons below. Learn more now. Then, contact us to get started.
What is a Corporation?
In general, a corporation is a separate legal entity that owns the business, assets, and property. So, who owns the corporation? Shareholders do. The greatest advantage of having a corporation is that shareholders are not responsible of the business’s debt. Now, how should your corporation be taxed – C corp or S corp?
A C corporation is standard. One of the main differences between a C corp and S corp is the taxation process. A C corp can be affected by double taxation if its income is given to business owners as dividends. The IRS views this as personal income. Therefore, the owners may need to pay individual taxes.
An S corporation reports its profits and losses to the IRS. However, taxes owed are passed down to the owners as an individual tax return.
Another difference between C corps and S corps are ownership restrictions. C corporations do not have a limit of shareholders. Whereas, S corps cannot exceed 100 and the shareholders must be American citizens or residents. S corporations are also limited to one class of stock. Meanwhile, C corporations are allowed to have multiple. Depending on your plans of growth, a C corporation may be a better option.
What is a Limited Liability Corporation (LLC)?
Similar to an S corporation, an LLC’s taxes are paid through the owners. LLCs also offer owners personal limited liability protection. This protects owners from business debts and other related liabilities. More benefits for having an LLC include the following.
- Distribute profits among owners
- Little to no ownership limitations
- Less required paperwork compared to corporations
- Adding additional owners require a written consent from existing owners
What is a Sole Proprietorship/Partnership/DBA?
A sole proprietorship is a business owned by one person. If owned by more people, it is known as a partnership. You may want to choose a fictitious name, or DBA, to conduct business transactions without using your actual name. Another reason to consider the DBA is that most banks require it when opening a business account. Also, many vendors and consumers prefer the DBA before conducting transactions. The benefit of this business type is how easy it is to begin and manage compared to the other options. However, the owner or owners could be held responsible of any business related debt.
Let’s narrow your options today!
Incorporate Business MA | We hope this blog offered insight but there is a lot more to understand about filing your business. Let’s talk. Ash Wasillidas CPA offers business consulting to discover the best options that protect your assets while offering tax saving benefits. Contact Ash CPA Accounting and Tax Services to schedule a consultation today. Call (617) 462-6651 or request an appointment online. Ash CPA Accounting and Tax Services has two convenient locations in Massachusetts. Visit the firm today at 1033 Providence Rd, Suite 4 Whitinsville, MA 01588 or at 945 Concord Street, Suite 100 Framingham, MA 01701.