In Part 1 of this three-part series, we discussed the pros and cons of forming a sole proprietorship or a single-member LLC (taxed as a proprietorship). In Part 2, we discussed what the three possible corporate forms of business have to offer. In this new article, (Part 3), we’ll consider your options if you’re acquiring or starting a business with more than one … [Read more...]
Corporations
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S Corporation Net Loss? Don’t Suffer a Surprise Salary
I sure hope your S corporation is making a nice profit and paying you a high salary. But suppose it isn’t? Suppose your S corporation is showing a net loss for the year? If you assume that a loss means you don’t have to pay yourself anything, you could be in big trouble. You see, if Uncle Sam determines that your S corporation didn’t pay you “reasonable compensation,” … [Read more...]
Buying a business? Make tax-smart price allocations!
When you acquire a business through an “asset purchase,” you win in two ways. You can generally avoid exposure to unknown or undisclosed business liabilities. The tax-basis of the assets can be stepped up (increased) to reflect the purchase price that you pay for the business. The step-up gives you bigger depreciation and amortization deductions. But there’s another … [Read more...]
How to buy a business the smart way
Thinking about buying a business? Then one of the most important decisions you’ll have to make is whether to purchase the assets of the business or the ownership interest in the business. And remember, either way there are important legal and tax issues to consider. If you are planning on buying a C or S corporation, a partnership, or an LLC (that’s treated as a … [Read more...]
How to choose the right business entity (Part 2)
In Part 1 of this two-part series, we discussed the pros and cons of forming a sole proprietorship and a single-member LLC (taxed as a proprietorship). In Part 2, we discuss what the three possible corporate forms of business have to offer. You’ll get the whole story (the good, the bad, and the ugly) when you read my new article titled Tax Tips: Choosing the Right Entity … [Read more...]