Selecting the Right Georgia Business Entity
By Mark Bryant
The business entity structure that you choose when starting a Georgia business entity search for your local business in Atlanta, Norcross, or anywhere in the State of Georgia has a significant impact on the taxes you will pay and the liability that you are exposed to as a business owner. Choose wisely to protect yourself while saving money. The Georgia Secretary of State is the place where we file, but the discussion should start with Mark Bryant, CPA.
1099 vs. Single-Person LLC
People who work as 1099s pay high self-employment taxes that can eat away at their income. The S-Corporation business entity, in the form of a corporation or LLC, offers a solution to this problem. Benefits of establishing an S-Corporation, as opposed to remaining a 1099 worker, include:
- Limited liability. The S-Corporation (in the form of a corporation or LLC) structure protects your personal assets.
- Easy-to-understand tax implications. Net profit or loss flows from your S-Corporation to your personal return.
- Separation of the entity. The business entity is separate from the individual who sets up the S-Corporation.
LLC vs. S-Corporation
Have you already set up an LLC? It’s not too late to switch if you need a better format. An LLC allows you to operate a partnership that offers a limit to the liability you are exposed to, but you may want to consider an S-corporation if you’re growing the business.
Shareholders of a Georgia S-corporation pay lower taxes on distributions than owners of an LLC pay on their income. The line between the entity and shareholders also allows for easier transfers of ownership.
Consulting a local Atlanta CPA is the best method for choosing the right entity to decrease your tax liability. An experienced Atlanta CPA can evaluate your unique situation to determine the ideal business entity to offer tax savings and to limit personal liability.