MENUMENU
  • SERVICES
        • Accounting
        • Your financial statements should show a complete picture of your business, and lay the foundation to help you create a strategy for the future.
          READ MORE>

        • Tax
        • Tax returns prepared to ensure we minimize your liability and keep more of your earnings over the long term.
          READ MORE>

        • Business Advisory
        • From proper entity selection at the inception of a business to developing an exit strategy, we are here to guide you in making informed decisions that are goal driven and take into consideration the materiality of your financial situation.
          READ MORE>

        • QuickBooks
        • We maximize your QuickBooks investment by customizing the software to meet your specific needs and industry best practices.
          READ MORE>

        • Litigation Support
        • We employ strong analytical and communication skills to produce evidence that supports your position in cases of a dispute or negotiation.
          READ MORE>

        • M&A Advisory
        • Whether you are selling, acquiring or expanding, we are well equipped to ensure you respond to opportunities swiftly and with confidence.
          READ MORE>

        • SJG
  • INDUSTRIES
        • Manufacturing & Distribution
        • Success in manufacturing and distribution hinges on your ability to manage numerous details with accuracy and foresight into how they impact current and future operations.
          READ MORE>

        • Consulting Services
        • You focus on your core competencies, customer service and strategy and we’ll keep you from getting caught off-guard by daily financial tasks or overwhelmed by growth.
          READ MORE>

        • Medical
        • Patient care is your primary concern. Providing the best clinical experience for your patients continues to get more difficult and costly. Delivery models are changing from fee for service to quality based.
          READ MORE>

        • Legal
        • Running a legal firm is a balancing act with high stakes. Your reputation hinges on your ability to support clients with responsiveness and accuracy.
          READ MORE>

        • Real Estate
        • Real estate is characterized by large material gains and losses. Every transaction has the potential to impact your accounting and tax situation.
          READ MORE>

        • Technology
        • Perhaps more than any other industry, technology companies must have an infrastructure built to scale. A culture of continuous iteration requires an ability to account for a fluctuating profit margin.
          READ MORE>

        • Professional Services
        • With a consultative, integrated approach to accounting, tax and consulting services for businesses and individuals, we work hand in hand with you to achieve your goals.
          READ MORE>

        • SJG
  • ABOUT
  • NEWS
  • CAREERS
  • CONTACT

SJG Blog

Selecting the Right Entity Type for Your New Business

Entity Type

There are a myriad of decisions that need to be made when starting a new business but the importance of selecting the right type of entity structure should not be underestimated. At first glance it may seem simple and straightforward, but beware! The wrong entity type can prove costly both initially and in the future.

The following factors should be considered when selecting the entity structure:

    1. Who are the parties/owners starting the business?
      • One or multiple parties
      • Individuals or businesses
      • Family relations or not
      • U.S. citizens or not
    2. What are the intended roles of each of the stakeholders?
    3. What is the nature of the business being started? (There are different considerations for different types of businesses.)
    4. In what location will the business operate and provide sales and/or services? Will business be conducted in multiple locations/states?
    5. How is the business being financed/funded? Are there requirements from interested parties or stakeholders (e.g., lenders, VCs)?
    6. What profit/loss or capital contributions are anticipated from stakeholders?
    7. What are your projections for Gross Revenues, Compensation and Net Income now and in future years?
    8. What is the expected make-up of employees and the anticipated benefits that will be provided?
    9. What are the goals of the stakeholders and planned exit strategy and does the structure align?
    10. What are the imminent and long-term risks and liability exposures that should be considered?
      ttt 
      It is only after these factors have been addressed that an informed decision can be made. The goal should be to choose an entity structure that will be most advantageous to the business and its owners, provide flexibility, and minimize taxes.
    11. What are the tax implications of your newly formed business structure and is this optimal?
      • New / separate entity
      • One or more entities (locations/product lines/income streams/risk minimization)
      • Subsidiary of an Existing Entity
      • Utilizing a Holding Company or Parent Company

In short, selecting the right entity structure for your business can be complicated. To avoid costly mistakes and have confidence that your business will get started on the right foot, we suggest consulting professional advisors when starting a new business.

Consider inviting SJG to help you with your decision-making process.
We know firsthand the pros and cons of different types of entities, which are often times not obvious, as there are many factors to be considered. One size does not fit all. For more than 25 years we have assisted businesses who have generated more than $1 billion in revenues and have personally consulted with over 200 emerging and start-up with planning and entity selection considerations.


 

Sidebar Newsletter Signup Form

  • We will never spam you or sell your email address.

Share This:

Facebook
Google+
Twitter
LinkedIn

Suscribe to Our Newsletter

Recent Posts