Business Structuring in the USA

Your choice of legal structure will not only have a direct impact on taxes, liquidity, liabilities & flexibility in operations but also on the diversification and scalability of your business.

Sole Proprietorship: Simplest business structure, only one person owns the business. Especially appealing because the losses your business might make will cancel out the income you made from other sources. The owner is personally responsible for the company’s liability.

General Partnership (GP): Multiple owners, i.e. partners. Partners own and manage the business and are responsible for its liabilities.

C Corporation: It is an independent legal entity, separate from the owners, shielding them from personal liability. These provide better prospects for raising capital. However, there is double taxation involved: federal tax on profits and income tax on profits distributed. These structures have high compliance and accounting costs.

S Corporation: Profits/ losses are passed onto shareholders as individual income, resulting in no double taxation. However, unlike a regular corporation, S corporations can only issue one class of stock.

Limited Liability Company (LLC): This is a blend of Partnership and corporation. No double taxation. No personal liability of the owners.

• Legal liability (the extent to which owners can be held liable for the company’s liabilities);
• Tax implications (cash flow requirements and double taxation);
• Cost of formation (incorporation, administrative, compliances and accounting costs to be considered);
• Flexibility (owners goals and business requirements are needed to be synced);
• Future needs (what will happen to the business if owners’ demise, do you wish to sell your business in future, how would you scale your business, plans for any international expansion).

Please take note that all the business structures exist to cater to various organisations of different sizes existing in different industries and targeting a different market segment and no business structure is per se superior to another.

We are your one-stop destination for all the financial, accounting, taxation and compliance needs of your business saving you on the cost of coordinating with multiple service providers and changing the service provider once the business outgrows their competence.

We help you in structuring your business, along with providing a range of other services to take full accountability as the virtual CFO to your business.