Why Form 2220 Entities 2023-2024

So, the three main entities when you're starting up your company are usually going to be an LLC, S corp, or sole proprietorship. I'm going to walk you through each of those. First, let's discuss the LLC. With an LLC, you'll be subject to what's called a self-employment tax. This tax is 15% of what you make and it is meant to signify that you work for yourself and are therefore responsible for your own employment. However, I recommend checking with your state for the exact rate. From what I've learned, it's typically around 15%. One major advantage of an LLC is that there is no personal liability. This makes it a popular choice for many people. Personal liability refers to the situation where someone gets hurt in your store. If your business is an LLC, they cannot sue you personally. They can only sue the LLC itself. This means they cannot go after your personal assets, such as your house or bank accounts. The protection offered by the LLC only applies to the business, not to personal liabilities. Another benefit of an LLC is that there is no limit on the number of owners or shareholders. You can have as many partners as you desire. Additionally, an LLC has what's called pass-through taxation. This means that if your store makes a million dollars in profit, you won't be taxed as a company. Instead, you will report that profit on your personal income tax return. This allows the profits to "pass through" to the owner, who will be taxed individually. Moving on to the next option, we have the S corp. An S corp is one of my personal favorites because there is no self-employment tax. This means right off the bat, you save 15% or whatever the specific percentage...