Entity Selection

California Tax Boutique offers personalized business startup services.  We help with entity selection, filing the appropriate paperwork with the Secretary of State, obtaining an EIN number, DBAs, business licenses, reasonable compensation, discuss the various options for sales taxes, payroll, bookkeeping, and best practices to save your new business money.   We can also help with business dissolution and revival of a suspended entity. 

Before you schedule an appointment, take a look a this simple table to help familiarize yourself with the different entities.

  LLC Corporation  S Corporation
Fromation Articles of Organization Articles of Incorporation Artices already filed under entity
Internal Governance Operating Agreement Bylaws, Shareholder Agreement Depends on entity structure
Owner Called Members Shareholders Shareholders
Owners Own Interest Shares Depends on entity structure
Owners Take Owners Draw Dividends Shareholder Distributions
Federal Tax Rate 15.3% self-employment tax + individual tax rate 21% + dividend tax rate Payroll tax + individual tax rate
CA Annual Fee Starting at $800 Starting at $800 Starting at $800

Not sure whether your business is financially ready to register as an entity?  You can always operate as a sole proprietorship until you have an idea if you will make money and how profitable you'll be.  By operating as a sole prop, you still get to deduct all your business expenses and you also get to avoid paying the $800 annual California Franchise Tax.  Once you have an idea of where your business is headed, we can re-evaluate whether becoming an entity best suits your needs.  Below is a summary of the benefits, or lack of benefits, while operating as a sole prop:

Employer Identification Number (EIN) Yes, but under your SSN
Bank Account Yes
Process Payroll Yes, provided you have a EIN, and only for employees, not for yourself
401k, SEP IRA Yes
S Corp Election No
Tax Rate 15.3% self-employment tax on net income + individual tax rate
Ability to Deduct Expenses Yes, same as any other business.
California Franchise Tax No
   


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