Video instructions and help with filling out and completing Which Form 2220 Entities

Instructions and Help about Which Form 2220 Entities

Hi everyone my name is Armand a busy Keon and I'm an attorney here in Los Angeles California and I specialize in estate planning trust and probate administration as well as asset protection and within the asset protection realm I provide business consultation and formation services to my clients and that's actually what we're going to be discussing tonight thank you all for joining me today what we're going to do is go over the different business entities that are available for your particular business we're going to cover some of the characteristics of each one and we're going to be talking about how each one can protect your personal assets as well as provide some form of business liability protection a few housekeeping rules I will be taking questions at the end so it can have questions just submit them in the little Q&A feature on the right hand side of your screen and I will answer them at the end I have a few questions that you guys have already emailed to me ahead of time so I will also be answering those and if you're having technical difficulties just send me an email and we'll make sure to guide you through it with that being said let's get started and let's jump right in to the first form of business entity I have some slides that are going to assist us through the process and make things a little bit more visual for those of you who like seeing visuals so let's get started so the first form of business entity that we have is what most of you will already have experience with and that's the sole proprietorship so the sole proprietorship is basically the simplest business entity form that you can have it is not a separate legal entity however so you have to keep that in mind instead it actually refers directly to the person who owns the business so for example you know John Smith is doing business as doggy daycare and he's a sole proprietor John Smith is basically the guy behind the business and they're one in the same doggy daycare is not a separate legal entity so you have to keep that in mind and because of this there's unlimited personal liability which means that the individual John Smith will be directly responsible for any business debts or contracts so with that being said it provides the least amount of personal liability protection and on top of that the owners of these types of businesses that are structured as sole proprietorships have to be careful because not only are their personal assets on the line for business debt and liability but you're putting your if you're married you're putting your spouses as well so your marital property is also your community property would be also on the line so it's the least amount of liability protection you can get from a business standpoint however it does have some benefits that people enjoy and one of them is management the fact that you know you're by yourself you can do whatever you want you control the business 100% so that's the big benefit that people see in sole proprietorship and the other one is formalities there's you don't really have to do anything to form a sole proprietorship this means you know you don't have to file any legal documents with the Secretary of State to get your business started but as a side note you I do want to note for you guys that you still have to apply for certain businesses business licenses in the county that you're going to be opening up your business in and you have to do other other things like you might have to if you decide to work under different name like doggy daycare for example you might need to apply for a fictitious business name so although there is no state legal requirements there are state there are city and county legal requirements that you have to keep in mind as far as transfer abilities concerned there's no restrictions I mean you're your own boss so you can sell your business whenever you want you don't have to ask for partner permission and the likes so in that sense it is you know beneficial because it does have some of those parks however again unlimited personal liability and marital liability so you have to be careful if you have personal assets and in addition as far as taxes are concerned there's no double taxation so the income that you earn in this business will be taxed on your personal income tax return and I'll go over what double taxation is before we get into the other entities but know that for a sole proprietorship whatever income that you aren't from this business that's what you're going to be reporting on your income tax return and it's one tax return that you're doing so what is double taxation this is going to be the most important factor to consider in addition to liability when you're thinking of the type of business entity to create for your new venture or an existing business essentially double taxation basically means you form for example ABC incorporated and you create this corporation and the corporation does business as you know a doggy daycare clicks for example it earns income and so at the end of the year at the end of the tax year ABC Incorporated has to file a tax return for themselves and so if they've earned income they will pay taxes on that income and then once they're done paying the taxes and they have their net amount they decide to issue dividends to its shareholders so its owners so then the shareholders will have to pay taxes on the dividends that they received which are which is essentially income like their return on the investment so that's what we mean by double