Business Entities

Before opening a business LLC, consider these top three essential steps:

1. Business Plan: Create a comprehensive business plan outlining your company's objectives, target market, financial projections, and marketing strategies. This will serve as a roadmap for your business's success.

2. Legal Structure and Registration: Choose the appropriate legal structure for your business, such as an LLC, and register it with the relevant authorities. Consult with legal and financial advisors to ensure compliance with all regulations and tax requirements.

3. Financial Preparation: Set up a separate business bank account, obtain necessary funding, and establish accounting systems to track income and expenses. It's crucial to have a solid financial foundation to sustain and grow your business.

A holding company is a parent company — usually a corporation or LLC — that is created to buy and control the ownership interests of other companies. The companies that are owned or controlled by a corporation holding company or an LLC holding company are called its subsidiaries.

Types of holding companies

Many holding companies don’t manufacture anything, sell any products or services, or conduct any other business operations. Their sole purpose is to hold the controlling stock or membership interests in other companies. This type of holding company is called a pure holding company.

Some holding companies, in addition to owning and controlling subsidiaries, do have their own business operations. This type of holding company is called a mixed holding company.

Other types of holding companies include the immediate and intermediate holding companies, which are holding companies owned by other holding companies or larger businesses.

Be sure to consult with…

A sole proprietorship is an unincorporated business owned and run by one person. This option is the simplest, no muss, no fuss structure out there. You are entitled to all the profits of the business.

However, unlike an LLC, you are also responsible for all of the liability.

Be sure to consult with an business consultant or tax accountant for the best structure for your business.

S corporations are corporations that elect to pass corporate income, losses, deductions, and credits through to their shareholders for federal tax purposes. Shareholders of S corporations report the flow-through of income and losses on their personal tax returns and are assessed tax at their individual income tax rates. This allows S corporations to avoid double taxation on the corporate income. S corporations are responsible for tax on certain built-in gains and passive income at the entity level.

To qualify for S corporation status, the corporation must meet the following requirements:

• Be a domestic corporation

• Have only allowable shareholders

• May be individuals, certain trusts, and estates and

• May not be partnerships, corporations or non-resident alien shareholders