Business entities
Now is the time you need to consider what type of business entity you should be looking for. Your Business Consultant, Mr. Sohrab Rowshan MBA, has over thirty-two years experience in this field, and has helped over 1,000 businesses to succeed and enjoy being self-employed.
Call and make an appointment. Your first consultation is absolutely free.
types of Business Entities
Even though there are many types of business entities out there, the most common ones are:
- Sole Proprietorship
- Partnership
- LLC (limited Liability Company)
- Corporation
Sole Proprietorship
In this type of business only one person is the owner. He bears all the risk of the business. You do not do anything to start.However, in California, the following items give you assurance and credibility.
You do not need anything to start your business unless your profession requires a professional license such as “Physician, Attorney, Tax Accountant. etc.” But to show you are in business and protecting yourself from identity theft, the following is recommended:
- A company typically uses a Business Fictitious name to conduct business using a simpler name rather than using their formal and often lengthier name. Fictitious names are also used when a preferred name cannot be registered, often because it may already be registered or is too similar to a name that is already registered. In the case of chosing a Business Fictitious Name, first you need to choose a name for your business. The name should showcase the way that best explains what you it is you do. First you need to go to any one of a number of “Domain Name” registers, such as GODADDY, 1 & 1, Register, or any other domain name register to make sure the name you have chosen is available. Some tips for choosing the name:
• Never choose name or names that are hard to pronounce or spell out.
• Never chose the numbers on your domain name.
• Never use the “&” sign
A DBA will give you reputation and credit. Help you present yourself and Business Owner
Service or Trade Business? Talk to us.
If you are in a service or trade business, the payer is required by law to have you complete form “W9”. This form is required to include your social security number. In case of hacking your Social Security number will become public. The Internal Revenue Service is now offering to those who are self-employed, an "EIN," which stands for “Employee Identification Number." You may freely give your this EIN number to anyone you wish without fear of identity theft.
If you are selling any tangible item you need to obtain a “RESALE PERMIT”
Some cities require you to register with them.
Newport Business Consulting Inc. will gladly be able to do all the above for you.
A Sole proprietorship
Is a business that has only one owner and is not incorporated or registered with the state as a limited liability company (LLC). A sole proprietor can be a self-employed individual or an independent contractor. Sole proprietors (self-employed individuals) report all business income and expenses on their individual tax returns (Form 1040, U.S. Individual Income Tax Return, Schedule C, E, or F). A sole proprietor may or may not have employees.
Pros & Cons
PROS:
It is very inexpensive
Your name is registered in county you reside.
Could be done in one day
CONS:
You are personally responsible for all the debts
All your net income is subject to Social Security Tax of 15.3%
Anybody in any other counties can use your name for their business even though the domain name is yours
DBA:
DBA is stands for “DO BUSINESS AS”. Your chosen name will be register
A partnership is a relationship existing between two or more persons or groups who join together to carry on a trade or business. Each partner contributes money, property, labor, or skill, and expects to share in the profits and losses of the business.
LLC It stands for : Limited Liability Company
This is another type of business it could be organized by one or more members. In case one member creates the LLC , The entity is not known in the eyes of Internal Revenue State but on the state level needs to be filed and pay $800.00 minimum taxes. This type
Two or more can create the LLC and register the name on the State Level. It has some PROS and CONS
PROs
1 – It will protect the members personal Assets
2 – No one in the State Level can take this name
Cons
1 – The minimum LLC tax of $800.00 and it will go up to $12,590.00 for income over $5,000.000.00 total
2 – Some many paper work involve
3 – It has initial investment
Corporation
C Corp
Corporation is a person or group of people who establish a legal entity by filing articles of incorporation with the state’s secretary of state, granting it certain legal powers, rights, privileges, and liabilities
However if the corporation qualifies as sub chapter “S” it would benefit the financial of the entity. We recommend you consult your Business Consultant to see which corporation (C or S) fits the operation of your entity. Regular “C” corporation pays taxes to federal and state based on the tax table, and when the profits are paid to the shareholders they pay taxes based on their tax rate. This is called “DOUBLE Taxation”.
If the shareholders of the corporation qualify to be treated for subchapter “S”, form 2553 needs be filed with The Internal Revenue Service within seventy five days after the Articles of the corporation have been filed. If the election is missed, there are special steps which need to be taken. Subchapter “S’ is passed through the entity and all income and loss of the corporation will be included in the shareholders through the form K-1. For more details please call Mr. Shorab Rowshan at 1.844.473.3660. He will be happy to answer any questions you may have.
Other Types of Incorporating
There are several other type of corporation such as:
Personal Service Corporation
Professional Corporation (APC)
None for profit Corporation
Exempt Corporation
S Corporation
The income of an S corporation generally is taxed to the shareholders of the corporation rather than to the corporation itself. However, an S corporation may still owe tax on certain income.
Personal Service Corporation
A personal service corporation involves services in the fields of health, law, engineering, architecture, accounting, actuarial science, performing arts, or consulting.
LLC
A limited liability company (LLC) is a structure allowed by state statute.
An LLC is formed by filing articles of organization with the individual state’s secretary of state. Owners of an LLC are called members. Members may include individuals, corporations, other LLCs, and foreign entities. An LLC can be formed by one or more members, and there is no maximum number of members. There can be no more than one active LLC with the same name in the same state. For federal tax purposes, an LLC may be treated as a partnership or a corporation, or be disregarded as an entity separate from its owner. An LLC can also be organized as a professional limited liability company (PLLC) or a limited company (LC).
LLC Conversion to be treated as Corp.
A Limited Liability Company (LLC) is an entity created by state statute. Depending on elections made by the LLC and the number of members, the IRS will treat an LLC either as a corporation, partnership, or as part of the owner’s tax return (a disregarded entity). A domestic LLC with at least two members is classified as a partnership for federal income tax purposes unless it files Form 8832 and elects to be treated as a corporation. For income tax purposes, an LLC with only one member is treated as an entity disregarded as separate from its owner, unless it files Form 8832 and elects to be treated as a corporation.
Name Reservation
A name can be reserved for a period of 60 days. Fees for reserving a name may apply. Newport Business Consulting Inc. may waive the fee for you. We are even able to renew the name for you for another 60 days.
The reservation of a name does not guarantee the name meets all federal and state requirements related to a specific entity type. Names are reviewed for compliance at the time documents are submitted to the California Secretary of State’s office for filing.
Corporation
S corporations are corporations that elect to pass corporate income, losses, deductions, and credits through to their shareholders for federal tax purposes. Shareholders of S corporations report the flow-through of income and losses on their personal tax returns and are assessed tax at their individual income tax rates. This allows S corporations to avoid double taxation on the corporate income. S corporations are responsible for tax on certain built-in gains and passive income at the entity level.
To qualify for S corporation status, the corporation must meet the following requirements:
• Be a domestic corporation
• Have only allowable shareholders
• May be individuals, certain trusts, and estates and
• May not be partnerships, corporations or non-resident alien shareholders
• Have no more than 100 shareholders
• Have only one class of stock
• Not be an ineligible corporation (i.e. certain financial institutions, insurance companies, and domestic international sales corporations).
Your First Consultation is Free (a $147.00 Value)
We’ve been in business for over thirty-two years, and we would like to build a good, healthy business relationship between you, your business, and ours!
When one starts a business, one doesn’t require someone to just file a piece of paper with your respective county or state, and then hand it to you; Our advice: find a professional who is versed in the tax system to consult with and guide you through the process. Advice as to what type of entity best fits your business model. Additionally, it would benefit you to have a professional explain the details of the cost of whatever business entity you may have in mind.
What needs to be done in order to be in compliance with the Federal and State?
Where you reside and where you are doing business. Then decide.
By keeping these facts in your mind, we offer:
• Unlimited FREE telephone or in-person consultation.
• Upfront Cost of organizing your business.
• Future cost of the entities
And More.
Call our office at (949) 932-0606 for more information and a convenient quote.
1500 QUAIL STREET # 270
NEWPORT BEACH . CA 92660
PHONE 1.844.green60 or 1.844.473.3660
1.949.932.0606
FAX 949.932.0673
EMAIL rob@NBCinc.blue
9330 CLIFTON WAY # 102
BEVERLY HILLS . CA 90210
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