The business entity—LLP, LLC, sole proprietorship, partnership, corporation, etc.— that you select for your business has enormous financial and tax implications. It is important that you make the right decision. We can explain each choice and its implications. As your business grows and changes, the type of business entity you choose may need to change also.
When you’re making a choice about entity, remember two really important things:
- Entity choice is state specific. It doesn’t happen at the federal level. You incorporate or organize at the state level. The laws of the individual state matter: not all entity choices are respected or treated the same in every state.
- Your choice of corporate entity may be different from your tax entity. Incorporation or organization with the Department of State in your state does not constitute a tax election with the Internal Revenue Service (IRS). For example, you can incorporate as a C corporation but elect with IRS to be taxed as an S corporation. You could also organize as an LLC but opt to be taxed as a partnership, S corporation, C corporation or disregarded altogether.
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Some information was found at:
http://www.forbes.com/sites/kellyphillipserb/2015/08/19/llcs-s-corps-and-pcs-choosing-a-business-entity/#42c969f1247f
