The choices surrounding which type of legal entity through which to operate can have long term and significant implications for all company stakeholders. Furthermore, not all legal entities share the same tax characteristics. Legal entity formation and other early-stage tax decisions can be critical to many downstream events, including after-tax cash flows for financing rounds, transactions, and other liquidity events. With flow-through options such as LLCs and S Corporations potentially providing shareholders and owners with annual personal tax benefits in the form of pass-through deductions and tax rate structure preferences, and corporate options potentially providing large tax savings down the road in the form of a Qualified Small Business Stock taxable gain exclusion, the choice should be weighed carefully.
Join Moss Adams subject matter experts to learn more about how to navigate the dynamics of the legal entity formation decision process.