Jasz
VIP Contributor
If you have a business and are looking for ways to reduce your tax liability, there are a number of options available to you. First, you can use the business structure that works best for your company.
The best option may not be what you expect. For example, if you have a small start-up that is just getting started, it may make sense to incorporate as an S corporation or limited liability company (LLC). But if you have a bigger business with annual revenues over $5 million, it might make more sense to form as a C corporation.
Second, choose the right kind of entity for your business needs. For example, if you want to sell products online and don't need workers or supplies on site, forming an LLC would likely be better than an S corp or C corp because it will allow you to pass along income without paying taxes on it immediately. However, if you plan on hiring employees in the future and need the benefits of operating as a corporation (like lower taxes), then forming this type of entity would be less beneficial.
Thirdly, consider whether or not your profits should be taxed at different rates depending on which state they are earned in (for example: Texas vs California).
The best option may not be what you expect. For example, if you have a small start-up that is just getting started, it may make sense to incorporate as an S corporation or limited liability company (LLC). But if you have a bigger business with annual revenues over $5 million, it might make more sense to form as a C corporation.
Second, choose the right kind of entity for your business needs. For example, if you want to sell products online and don't need workers or supplies on site, forming an LLC would likely be better than an S corp or C corp because it will allow you to pass along income without paying taxes on it immediately. However, if you plan on hiring employees in the future and need the benefits of operating as a corporation (like lower taxes), then forming this type of entity would be less beneficial.
Thirdly, consider whether or not your profits should be taxed at different rates depending on which state they are earned in (for example: Texas vs California).
