Don Farmer's Entity Selection 101

Overview

Selecting the appropriate legal and tax structure is one of the most important decisions facing business owners and their advisors. The choice of entity can significantly affect taxation, liability protection, operational flexibility, ownership transitions, and long-term business objectives. This course provides a practical introduction to entity selection considerations for new and existing businesses, focusing on the tax and financial implications of commonly used business structures.

Participants will examine the characteristics, advantages, and disadvantages of sole proprietorships, partnerships, limited liability companies (LLCs), S corporations, and C corporations. The course explores how entity choice impacts income taxation, self-employment taxes, basis considerations, distributions, loss utilization, and business succession planning. Attendees will also gain insight into factors that influence entity selection decisions and learn how to evaluate the most appropriate structure based on a client's or organization's specific circumstances.

Through practical examples and case studies, participants will develop a framework for analyzing entity choice alternatives and identifying common planning opportunities and pitfalls associated with business formation and restructuring decisions.

Highlights

Overview of business entity structures

Sole proprietorship taxation and considerations

Partnership and LLC taxation fundamentals

S corporation eligibility requirements and tax treatment

C corporation taxation and shareholder considerations

Comparing pass-through versus non-pass-through entities

Self-employment tax and payroll tax implications

Owner compensation and distribution strategies

Basis considerations across entity types

Liability protection and non-tax factors affecting entity selection

Qualified Business Income (QBI) deduction considerations

Entity conversion and restructuring issues

Succession planning and ownership transition considerations

Common entity selection mistakes and planning opportunities

Case studies illustrating entity choice analysis

Prerequisites

None

Designed For

CPAs, tax practitioners, enrolled agents, accountants, financial managers, business advisors, consultants, entrepreneurs, and other financial professionals who advise businesses on formation, tax planning, or organizational structure decisions.

Objectives

Identify the key characteristics of common business entities.

Compare the tax treatment of sole proprietorships, partnerships, LLCs, S corporations, and C corporations.

Evaluate the advantages and disadvantages of different entity structures based on business objectives.

Recognize the impact of entity selection on taxation, liability exposure, and operational flexibility.

Assess the effects of entity choice on owner compensation, distributions, and basis.

Identify common tax planning opportunities and risks associated with entity selection decisions.