Your business structure can affect the taxes you pay, your paperwork and your personal risk. Here is a simple overview. An attorney can advise you on the legal side, and a CPA can help with the tax side.

Sole proprietorship

This is the simplest option. Business income is reported on your personal return, and you pay self-employment tax. You generally have no legal separation from the business.

Limited liability company (LLC)

An LLC can offer liability protection. By default, a one-member LLC is generally ignored for income tax purposes, and an LLC with several members is taxed as a partnership. An LLC may also choose to be taxed as a corporation.

S corporation

This is a tax election. Income generally passes through to the owners, but owner-employees must take reasonable pay through payroll. It may save some self-employment tax, but it also adds costs and filing requirements.

C corporation

A C corporation pays its own tax, and shareholders are taxed again on dividends. Florida also has a corporate income tax that can apply to C corporations.

Florida requirements

Most Florida corporations and LLCs file with the Division of Corporations and generally must file an annual report by May 1. Depending on your business, you may also need local licenses and state tax registrations.

Review it as you grow

The best choice for a new business may not be the best choice later, so review your structure as your income and plans change.

Have questions about your situation? Tax rules change and every situation is different, so please talk with a professional before acting on general information. Call Fajardo & Associates at 407-720-7220 to make an appointment.