If you work with entrepreneurs or small business owners, you likely have an appreciation of their vision, determination and work ethic. You may also have run into some common hurdles that can derail their finances. By focusing on the following planning considerations, CPAs and advisers serving entrepreneurs can keep their clients’ business and personal finances on track.
Choose an appropriate business form
Helping entrepreneurs evaluate key tax and nontax factors when selecting a business entity is not only important to the business’ financial success, but also the owner’s.
Should they operate as an S or C corporation, partnership, limited liability company or sole proprietorship? What are the classes of ownership, special allocations, basis, liability, elections and distributions for each structure and the impact of these factors on the owner? Navigating these complex decisions is crucial to getting their business off on the right foot. If you are an AICPA Personal Financial Planning Section member or CPA/PFS credential holder, see Chapter 18 of The Adviser’s Guide to Financial and Estate Planning for a comprehensive overview of entity selection.