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Businesses Formation

Based on your objective and line of business legal status, we assist you in selecting the appropriate form of legal entity. We thoroughly explain the legal and tax implication of each entity to assist you to choose the most advantageous form of entity for you.

We incorporate your business and file all the necessary legal documents for you. If desirable and appropriate, we may incorporate provisions such as “right of first refusal” or “spousal consent” in the bylaws, or draft a separate agreement or contract, to protect you from being forced to work with a stranger in case of a dispute among you as business owners. Here are the most common form of legal entities:

(a) Sole proprietorship

Tax Tip:  Based on tax practitioners’ experience, Schedule C s with revenue in excess of $100,000 are more susceptible to an IRS audit than an average taxpayer. Therefore, you may consider incorporating the business once the revenue exceeds $100,000.

(b) Corporation

Tax Tip: To mitigate double taxation, it may be advisable to consider an S corporation or a Limited Liability Company (LLC).

(c) S corporation

(d) Partnership

(e) Limited Liability Company (LLC)

Tax Tip:  Members’ of an LLC may deduct their losses up to the amount of their capital in the LLC. According to the IRS, since each member of an LLC has limited liability, investors are analogous to limited partners under IRC § 469. For purposes of passive loss rules, LLC members are treated as limited partners, even if the taxpayer is a member-manager.


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