Calhoun Business Associates
Date: 6/15/15
Re: Recommendation for Business
Recommendation of Business
First of all congratulations on your business and its success our company is here to help you every step of the way. I understand that you are trying to start up a business. As I see that you are no stranger to the business world. I see that you have already started up a sole proprietorship and the profits are already great and you are looking to expand. I would recommend the S-Corporation. The reason that I am recommending the S-Corporation is because you are able to pay taxes through your personal income taxes and your business will not be taxed. Just to explain the S-Corporation will pass through and will not have to pay federal income taxes at the corporate level. With any business income losses are passed on to the shareholder to report onto their personal income tax. This would prevent double taxation and have taxes only paid once that would only be through your personal income tax return. Another reason to choose an S-Corporation is because you would not have to comply with all those complicated rules. As you said you may want to expand your business to a different state. You also informed me of your assets. The shareholders are free from any debts and business liabilities of the corporation. For instance your personal bank account or any other assets you own are not in danger to pay off you r business debts. This business would have an unlimited continuation if the owner was to die or leave. The reason being is that the company can have stocks and issue them to any potential investors. With investors the company will be able to raise money for the building on of the business. With the S-Corporation all the profits would pass through to the owner but as far as control goes the shareholders are in control. Now that I have made my recommendation I know that you are probably wondering why I did not choose any of the other partnerships or corporations and here are my reasons. Let’s start off with partnerships. In a general partnership you would have to start the company with another individual that means you would have to share the profits with your partner and the capital. The control would have to be shared between you both. With this type of partnership you are responsible for your partners’ actions, there is unlimited liability, and each partner is responsible for all debts and obligations. With limited partnership you are responsible for all liabilities. The limited partner is responsible for only what they invest into the company. The limited partner would get a percentage of the profits in the business and you would receive the rest of the profits. Then there is the C-Corporation you would only lose what is invested into the business but there is double