You may have realized your dream and finally opened up your own small business. Or perhaps you’re running a third-generation farming and ranching operation, or you and your relatives own several tracts of oil and gas minerals that you would like to manage together. What do all of you have in common? You could all benefit from choosing the right entity for your needs.
Choosing the right business entity can dramatically improve the management and profitability of your business while at the same time reducing or eliminating taxes and your own personal liability. Proper business entity formation can help you in the following ways:
Shield your personal assets from potential liability
The most common reason business entities are formed is to protect personal assets from liabilities associated with the business. No one wants to lose his or her personal savings because of an accident at work. Having the right business entity and proper structure can help you shield your personal assets.
Tax Flexibility
Each business entity receives its own tax treatment. Some entities, like a sole proprietorship or a partnership, are ignored for tax purposes. The C Corporation is subject to double taxation, once at the corporate level and again at the individual level, whereas an S Corporation avoids taxation at the corporate level. An LLC can be taxed either way, depending on how you set it up. Choosing the right entity will help you better manage your tax plan. We will work with your accountant and other key advisors to determine the right choice for your company and structure it to best meet your needs.
Effectively control and manage your business
Whether you are a shareholder in a corporation, a member in an LLC, or a partner in a partnership, your ability to manage and control your business can change based upon the type of entity you operate. Oklahoma Law treats each entity differently and if you have not set up the rules for how you run your company, Oklahoma Law may decide for you. Of course, this decision may not take your specific needs and goals into account.
Estate Planning
Choosing the right entity can help with more than the day-to-day running of your business. There are many estate planning goals that can be achieved through having your assets in an LLC or S Corporation. Your choice of entity will depend upon a number of different factors, including your goals, assets, and type of business. We can discuss the differences between each entity with you and determine which one best meets your particular needs.