How To Know What Formation To Choose

Criteria for choosing

‍When it comes to choosing the tax formation for your business, it can be quite possibly the biggest decision you will make. It directly effects how much money you get to keep in your pocket at the end of each year. That is why when it comes to determining your formation, you should be basing it on how much profit the business is/will be making in a given year.

Through personalized consultations and strategic planning, we help each client determine what formation to choose when they start each new business to ensure they are optimizing as much of the tax code as possible.

Each formation has it's own unique benefits, and that is why we look to utilize multiple formations with our clients when the situations call for it.

Profit levels for each formation type

‍We will start with the most basic formation, which is the basic LLC, or limited liability company. This is typically the best formation for you if you are making profit between $0 and $40,000 each year. Once you exceed the $40,000 per year in profit, it's typically worth the additional investment to make your company an S-Corp, or small business corporation. This is best if you are making between $40,000 and $210,000 in profit each year. Finally, if your business is exceeding the $210,000 in profit in a given year that is when it usually makes sense to make it a C-Corp, or corporation. These levels are determined solely based on typical taxes owed on the net profit each year, meaning how much money you have left after all your expenses have been paid.

By offering strategic guidance and actionable insights to our clients, we are able to get their businesses in the right situation to thrive for the future.

It is important to note that each of these markers for the formation types is not definitive, and you should consult with your tax professional before making the final decision of what formation to choose.

Personalized approach

‍Like we mentioned earlier, each formation has it's benefits given the circumstances. When we sit down with clients, we always start with what your vision is for you, your business, and your family. From there, we reverse engineer a plan that gets you to that destination. Choosing a formation for each of your businesses is a vital key to securing your future for both yourself and your business. That is why we do not take choosing the proper formation lightly.

Determining your tax structure can make or break your future business.