People decide to setup business entities for a variety of reasons. Some are starting or expanding a business. Some are purchasing rental properties. Others want to hold investment assets through them. The reasons are limitless.
And no wonder people setup business entities, they can off many benefits, including:
Business Entity Advantages
- Limited liability / asset protection
- Privacy
- Formal structure
- Tax benefits
- Separation of ownership and management
- Flexibility
- Estate planning / avoidance of probate
Reaping these rewards, however, requires that you use the right business entity in the right situation. Different business entities are beneficial in different situations and knowing which to use when is key to success.
Unfortunately, many people choose the wrong business entity because they either didn’t get advice, listened to a friend, or a “guy” they knew. This can lead to disastrous consequences, including:
Business Entity Disadvantages
- Loss of limited liability / asset protection
- Loss of privacy
- Double taxation
- Compressed tax rates
- Self-employment tax
- Other negative tax consequences
- Complex account
- Complex tax rules
- Additional tax filing requirements
- Penalties
- Burdensome administrative requirements
These pitfalls can cause an otherwise profitable venture to become an unprofitable expensive headache, but they are easily avoidable by doing some research and analysis or hiring an advisory.
To help people choose the right type of business entity and avoid all the consequences of choosing the wrong one, we created this helpful “U.S. Entity Information Guide”. It explains the different U.S. entity types, their tax treatment, and their advantages and disadvantages.
CLICK HERE TO DOWNLOAD THE GUIDE
Conclusion
It is our sincere hope that our guide will help you choose the right entity for your particular situation so you can take advantage of all the benefits the right business entity has to offer.
We have been helping our clients choose the right entity for over 20 years—we know what entity to use when. We can help you too.
If you have questions about structuring or restructuring your U.S. investment, please don’t hesitate to contact us here.