Video instructions and help with filling out and completing Where Form 8453 S Entities

Instructions and Help about Where Form 8453 S Entities

So I heard a couple of people here say that you're either in a counseling industry or doing something health-related or professional services but they're often times that the law will say if your business involves a certain type of activity normally healthcare normally you know providing high level professional services we are going to require you to organize as a certain way for example if I you know if I wanted to go out and start you know start my own practice or start you know op i would have to organize as a pllc you know professional limited liability company as opposed or you know a partnership or some other recognized form for that profession that I'm going into the other thing to keep in mind is that there there are different tax and financial implications associated with various entity types I'm not going to get into much detail on that because a lot of that has to do with your own personal financial situation and what makes the most sense for you but the one thing that you know the one example the one thing that's really this is the last time I'll do this the one thing that's really important here is the distinction between like an LLC or what's known as a flow-through or pass-through entity and a corporation as it relates to this whole question of tax or double taxation right so let's take this let's take this example normally you have let's say you form an LLC right that LLC's out to making money everything's going well right at the end of the year when you get ready to file your tax return the LLC if you've done your your elections and done what you need to do all of the money that is made at the LLC level will essentially pass through this entity that's why they call it a pass-through entity and when you get ready to file taxes your taxes will be filed at your personal level based on you know whatever your pro rata share of the earnings like if you've got more full partners to say like there's three of you whatever they make you're splitting you know you know thirty percent or thirty three percent so everybody gets their piece and then they record that piece and that's what they report as income for purposes of paying taxes at the end of the year the situation all of it comes to you whatever the whatever the profit or loss yeah yeah whatever whatever that's left yet that's art that's right so whatever after you take a you know overhead and everything that's associated with the operating of the business whatever is left over in terms of that profit or that loss because it could be either passes through to you and that's what you record for purposes of your tax now take the take the corporation standpoint it's a little different because the corporation is up here it's making money but at the end of the year the corporation will have to file a corporate tax return and pay taxes at the corporate level right and then you as an owner or as a shareholder of that corporation if you're paying yourself a salary or paying yourself some sort of bonus or some sort of otherwise extracting value from this entity during here when you get ready to get the end of the year you have to report that as taxes so you're paying a second level of tax that's why a lot of times from a from a financial standpoint all things being equal again this is not a hard and fast rule it's generally from a tax standpoint advantageous to for more organized as an LLC and have it pass through now the one nuance or caveat to that is that there are certain corporations that you can form and get certain elections and go through certain you know dot certain i's and cross certainties to get pass through treatment in a corporation but that's that's a little beyond the scope of what I want to cover today you know the key thing that realize is that when you're setting up your your business and thinking about what you want to organize as it makes sense to sit down with an accountant or sit down with somebody and really think about hey you know is it going to impact me in this way or this way especially if you've got a real cop web of other businesses and other investments and other things that kind of go into your portfolio I think you had a question okay maybe we could talk about it after class so that's it so the other thing to keep in mind when you're thinking about forming an entity is corporate formalities for example taking the distinction between the LLC and the corporation when you organize as a corporation the law will have so many different requirements that you have to follow you have to have you know meetings you have to you know adopt certain internal governance documents you have to make you know file certain reports at the end of the year there are a lot of regulatory requirements that you have to abide by whereas when you do the LLC or something different those regulatory requirements may not apply so that's the other thing to look at so in summary really that the key point is that you should protect yourself and protect your assets by forming some sort of entity I tell a lot of people sometimes they say well I'm not really sure if I'm really serious about this business I don't want to go out and form something that makes sense for for a limited period of time right while you're in the exploration phase and talking to people and doing the research okay maybe you make sense but at the point where you