Certified Public Accountant
Certified Valuation Analyst
Certified Financial Planner

1319 W. Baseline Rd, Suite 201
Lafayette, CO 80026
Tel: 303-530-4650
Fax: 303-530-4971
Choice of Entity
One of the most important decisions faced by each business is what type of entity to use.  There are several different types of entities available, each with their own unique legal and tax attributes.  The services offered by the firm of Brad Borncamp, CPA, LLC can help you to understand some of these attributes and to match your specific goals and objectives to an appropriate type of entity.  Choosing the right entity may help to achieve the following goals:

• Protecting assets from creditors & predators   • Minimize income and payroll taxes
• Protecting assets from the acts of employees • Make tax wise business decisions
• Attracting investors and financing sources       • Substantiate business deductions
• Structure the acquisition of another business   • Comply with various tax requirements
• Set up buy/sell agreements for businesses      • Provide for central management of assets

The firm of Brad Borncamp, CPA, LLC offers more than tax and accounting services.  We can also assist you with choosing an appropriate entity, understanding financial arrangements, and complying with complicated rules that may affect your business.  We work with each client to help them identify and achieve their specific goals.  We do not sell insurance, investments, or any other commissioned products.

Types of Entities

There are several different types of entities available in most states.  Here are some types of entities you may want to consider for your business:

           • Sole proprietorship (one owner)
           • S Corporation (one or more owners)
           • C Corporation (one or more owners)
           • General Partnership (multiple owners)
           • Limited Partnership (multiple owners)
           • Limited Liability Company (one or more owners)
           • Joint Venture (multiple owners)
           • Variations of the above (i.e. Parent, subsidaries, etc.)

What To Consider

There are usually multiple considerations affecting which type of entity should be used.  In addition to the legal and tax considerations, you must consider your specific circumstances.

Will you have other partners or investors.  Will you have employees. Will you be exposed to creditor or product liability.  Will you operate in more than one state.  These are some of the questions we discuss with clients to help them understand how these variables may affect their choice of entity.  The services offered by the firm of Brad Borncamp, CPA, LLC can help to identify questions you should consider when deciding on a type of entity.  We will also refer you to attorneys and other professionals you may need.

You should also consider if the type of entity you choose will affect whether you qualify for various government programs for minority owned businesses, or the ability to get contracts.

Where To Start

Whether you have already started a business or are in the planning stages, you should gain an understanding of the different types of entities.  There are many sources of free information, but you should consult with an attorney, a CPA, and an insurance professional to find out how the different entities may affect your specific business activity.

This can be simple or complex, depending on your situation and goals.  For most situations, understanding a few basis concepts will yield significant benefits.  Consider the following:

  • How many and what type of owners         • Are there both active and passive owners
  • In which state(s) will this business operate   • Will this business have creditors?
  • Will this business have product liability        • Will you be personally liable on loans
  • Will this business have employees              • Is an entity required by the customers
  • What income tax benefits are available        • Will the business own real estate
  • Will your spouse be an owner                     • Can you afford the cost of an entity
  • Will an entity benefit your situation            • How long do you expect to be in business
  • Do the owners plan to sell the business  • What are the owners' retirement plans?

Identify the questions that relate to your specific business activity and seek professional advice on how the various types of entities affect you.  Each situation is different and the each type of entity may have different results.

Business Activity

All businesses need to perform administrative and accounting duties regardless of which type of entity they choose.  If you choose an entity other than a sole proprietor, you will need to file with the Secretary of State to establish the legal existence of the entity for each state in which you operate.  You will need to maintain records of the meetings for the entity’s shareholders, members, or board of directors to document its activity.  You will need to renew the entity’s licenses, usually annually.  You may also need to register the entity with other agencies.  All businesses, regardless of the type of entity, will need to maintain their accounting records and file the relevant sales, payroll, property, and federal and state income tax returns.

Business owners often find there is little time left for these administrative and accounting duties.  It is usually better for them to spend their time running their business and planning for its growth while leaving the administrative and accounting work to outside professionals.  The attorney can help with legal and administrative work, an outside payroll service can process the payroll and related reports, the firm of Brad Borncamp, CPA, LLC can provide you with accounting, tax planning and preparation, and management consulting services.

The firm of Brad Borncamp, CPA, LLC can help you choose an entity and assist with your accounting, payroll, sales, property, income tax preparation, and business planning.

                                           Don’t delay, start today

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