We Can Help With Your Business Tax Matters
Business owners in California can face significant penalties when they fail to consider tax matters as part of their planning and entity selection process. Taking the time to contemplate tax considerations at the start of forming a business is frequently a key component of why a business succeeds or fails. Selecting the wrong business entity or neglecting important tax considerations can lead to the buildup of unpaid tax obligations and penalties so substantial that the business isn’t sustainable.
In certain instances, like failing to withhold and deposit payroll taxes properly, the business owner may be accountable for the outstanding tax. Additionally, business owners must consider various tax matters when passing the company on to the next generation or a new executive group.
Prevent Tax Issues Before They Develop
At Morgan Sebastian Law, PC, we are committed to helping business owners prepare their business tax requirements. We provide business tax planning services for a wide range of company necessities, such as business formation, routine tax planning, payroll and employment tax administration, and company succession planning. Contact us for a confidential and free 30-minute consultation with an experienced tax professional at Morgan Sebastian Law, PC, please call 877-938-1350.
Legal Considerations For Entity Selection And Business Structure
When forming your business, selecting the right entity is an exhaustive procedure that is largely contingent on your particular business objectives, tax planning and a variety of other factors.
New company owners in the U.S. may select from five business structures:
- Sole proprietorship
- S corporation
- C corporation
- Limited liability company (LLC)
In California and all 50 states, there are few instances when business owners benefit from a sole proprietorship. However, this type of business entity is the default when individuals fail to formally select an entity at the start of forming their business. A sole proprietorship is generally less favored because it doesn’t protect personal wealth from the threat of business liabilities. There are, however, a few circumstances when this business structure may be suitable.
Tax Implications Are Dependent On The Type Of Business Entity
Undergoing this process for your business can vary greatly depending on the entity you choose. If you form a partnership, S corporation, LLC or remain a sole proprietorship – these units are recognized as pass-through entities. Pass-through entities aren’t subject to tax at the entity level. Instead, the earnings of the company owners are taxed on their own tax returns.
Conversely, a traditional C corporation is subject to potential double taxation at both the individual and entity levels. Likewise, tax advantages exist that are linked with this entity, including a chance to delay taxation, providing that the corporation retains its income and capital gain is not realized. Ultimately, business owners must carefully evaluate the risks, benefits and company goals when selecting the business entity type that’s most beneficial for their company needs.
Reliable Guidance For Payroll & Sales Tax For Commercial Employers
All company owners must manage and abide by a variety of business taxes at both the state and federal levels. Payroll and employment tax may incorporate California state payroll taxes given by the Economic Development Department, while the IRS administers payroll taxes at the federal level.
Payroll taxes in California include:
- Unemployment insurance (UI)
- State disability insurance (SDI)
- Employment training (ETT)
- Personal income tax (PIT)
A variety of employers may have to pay employment taxes in California ranging from large corporations to small business owners with just one employee. If you have any questions or face possible infringements for payroll or California sales tax audit, speak with a knowledgeable business lax lawyer.
Free Initial Consultation
Additionally, Morgan Sebastian Law, PC, offers informed guidance concerning business entity formation, succession, planning and employment taxes. To speak with our attorney about your business taxes, call our office in Orange, California at 877-938-1350 to schedule a free consultation or complete our contact form. We serve clients across California and Nationwide.