Business Planning FAQs

What factors should be considered in choosing the type of business form for my business?

Although there are many important things to think about when choosing a business form, some of the main considerations include your preference of tax treatment, your plan to capitalize the business, whether you plan to issue stock and trade it publicly, how you plan to structure the management of your business, and issues surrounding the liability of the business owners, among other things.

It is very important to plan your business and to work closely with someone who can help you choose the business form that will meet your needs.

What is the Form 2553?

The 2553 Form, known as the sub chapter S election, is required to be filed with the IRS to get S-corporation status for purposes of federal taxation. Filing this Form with the IRS is used to convert a C-corporation into an S-corporation.

What IRS forms does a co-owned LLC file?

Unless members elect otherwise, a co-owned LLC is considered a partnership. Though the LLC itself does not pay taxes to the Internal Revenue Service, it files Form 1065, U.S. Partnership Return of Income, and issues each member a Schedule K-1 reporting their share of profit and loss. Members file their personal tax returns (usually Form 1040) and report their LLC distributions on Schedule E.

What is the Management Structure of an LLC?

An LLC is typically managed by its members/owners (referred to as member-managed). In that respect an LLC is unlike a corporation, which has a much more rigid and defined management structure, including directors and officers. All owners of the LLC are typically referred to as members, and they can have control and voting interest proportional to their ownership interest, or in proportions different from their ownership interest.

What IRS forms does a single-member LLC file?

Unless they elect otherwise, the single member of an LLC reports their share of profit and loss in the company on Schedule C of their personal tax return (usually Form 1040).