Tampa, FL asked in Tax Law and Business Formation for Florida

Q: Hello I live in Pinellas County Florida. I'm looking into starting my on business.

I would like my personal taxes and my business taxes to be seperate. Which entity would I create my business as?

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2 Lawyer Answers
Terrence H Thorgaard
Terrence H Thorgaard
  • Tax Law Lawyer
  • Freeeport, FL
  • Licensed in Florida

A: You should probably consult with an accountant regarding any tax advantages, but in general you might want to form a limited liability company (LLC). As the title suggests, that would limit your personal exposure to liability, to some extent.

James L. Arrasmith
James L. Arrasmith pro label Lawyers, want to be a Justia Connect Pro too? Learn more ›
  • Tax Law Lawyer
  • Sacramento, CA

A: If you're aiming to keep your personal and business taxes separate in Pinellas County, Florida, considering the structure of your business entity is crucial. For your goals, forming a corporation (either a C Corporation or an S Corporation) or a Limited Liability Company (LLC) could be beneficial. Each of these entities can help ensure that your business taxes are distinct from your personal taxes, but they do so in different ways.

A C Corporation is taxed as a separate entity under the Internal Revenue Code, which means the corporation itself pays taxes on its income. When you take money out of the corporation (as dividends), you pay taxes on that income on your personal tax return. This structure creates a clear separation between your personal and business finances and taxes. An S Corporation also allows for separation but with a different tax treatment, where income, losses, deductions, and credits flow through to shareholders and are reported on their personal tax returns, avoiding the double taxation scenario common with C Corporations.

An LLC offers flexibility and is often treated as a pass-through entity for tax purposes, similar to an S Corporation, but it can choose to be taxed as a C Corporation. The LLC itself doesn't pay income taxes; instead, profits and losses are passed through to the members' personal tax returns. However, electing corporate tax status for an LLC can achieve the separation you're looking for. Consulting with a tax advisor or attorney can help you understand the implications of each choice and decide which entity structure aligns best with your business goals and tax planning strategies.

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