Part 3 – Disadvantages of an S Corp Entrepreneurs face several choices when structuring their business. This series of posts is intended to help them evaluate whether or not they should utilize S Corp status. The first post covered what an S Corp actually is (a tax status, not a business entity) and reviewed the benefits of an S Corp over a C Corp (pass-through taxation and the QBI deduction). The second post compared the…

Part 2 – Business Entity Comparison: S Corp Status vs LLC Entrepreneurs face several choices when structuring their business. This series of posts is intended to help them evaluate whether or not they should utilize S Corp status. The last post covered what an S Corp actually is (a tax status, not a business entity) and reviewed the benefits of an S Corp over a C Corp (pass-through taxation and the QBI deduction). This second…

Part 1 – Business Entity Comparison: S Corp Status vs Corporation One of the first legal questions a startup’s founder faces is “what business entity should I form?” There are a host of options – including sole proprietorships, partnerships, limited liability companies, S Corporations, and C Corporations – each with its own advantages and disadvantages. Of the various options, S Corps always seem to cause some confusion, likely because of their chimeric traits, combining features…

A guide to calculating tax savings from the Qualified Business Income Deduction for owners of an LLC, S Corp, partnership, or sole proprietorship In 2017, Congress passed the Tax Cut and Jobs Act. This new law provides large tax deductions for owners of certain pass-through entities. Beginning for the 2018 tax year (and continuing every year through 2025, unless extended by Congress), owners of pass-through entities can deduct up to 20% of their share of…

There is no denying that right now is an exceptionally difficult time for small businesses and startups. But the government is trying to ease the pain. Last week, Congress passed the CARES Act, a $2 trillion coronavirus relief package. The legislation established or expanded several programs to help small businesses. Here’s how it could help you and your business. Paycheck Protection Program One of the largest parts of the CARES Act sets aside nearly $350…

Last week, the FTC announced that it would review its Endorsement Guides. The Guides – last updated in 2009 – help influencers, endorsers, celebrities, and companies navigate the FTC’s regulatory scheme. Although the Guides are advisory, they explain when the FTC might bring an action under Section 5 of the FTC Act, which generally prohibits deceptive advertising. Reading through the Endorsement Guides is a must for any company advertising on social media or using…

You just invested money to start an LLC. Now you want to bring in partners to manage the company or help with the work and offer them some form of equity compensation. How do you go about doing that? Unlike corporations, LLCs cannot issue restricted stock, stock options, or the like. But LLCs have an easy and tax efficient alternative called a “profits interest.” Profits interests can provide many benefits for their holders. The holder…