Entity Structuring
Your business structure is a tax decision, too.
Review the tax implications of business structures and elections, with legal questions reserved for qualified legal counsel.
Discuss your needs
- Ownership
- Tax treatment
- Reporting
The engagement
Separate the tax question from the legal decision.
Ownership, tax classification and reporting obligations need to be considered together. CTAS reviews the tax side of an existing or proposed structure within an agreed engagement; legal formation and legal documents require separate legal advice.
Legal organization and federal tax classification are related but different questions. An LLC, for example, does not have one universal federal tax treatment. Before discussing an election, CTAS considers the existing structure, ownership, current treatment and proposed change within the agreed tax engagement. Choosing a tax treatment requires the facts; it is not a default recommendation to elect S corporation status.
01 / Potential scope
Review of the existing or proposed tax classification
Provide the ownership details, formation and election documents, prior returns and the business changes being considered. The review starts with the current treatment and relevant circumstances, including how the owners work in and receive money from the business. Legal ownership rights and governance remain questions for counsel.
02 / Potential scope
Comparison of relevant tax and reporting implications
A comparison may consider owner compensation and distributions, how income is reported, and the filing and recordkeeping responsibilities associated with the alternatives. An election can introduce obligations as well as potential benefits. Neither an S corporation election nor another classification guarantees lower tax.
03 / Potential scope
Agreed tax elections and coordination with your legal adviser where appropriate
Identify which tax elections or reporting steps are included, who is responsible for implementation and where counsel or another adviser needs to participate. Legal formation, governance, ownership agreements and legal documents are outside the tax advisory scope. Ongoing accounting, payroll work and tax returns are not automatically bundled with a classification review.
The services, periods, jurisdictions, deliverables and responsibilities included are defined in your engagement agreement. Additional work is included only when specifically agreed.
General background: IRS guidance on LLC federal tax classification. The relevant facts and applicable requirements must be reviewed for your engagement.
A working relationship
Clear responsibilities on both sides.
Who this service can support
- Owners starting a business or reconsidering an existing tax classification
- Professional-services firms anticipating ownership changes
- Business owners considering an entity election or changes across related businesses
What you provide
Provide ownership details, existing entity and tax-election documents, relevant returns and the proposed changes. Involve legal counsel for formation, agreements and legal rights.
CTAS carries out the agreed work using the information provided. Missing facts or documents can affect the work and timing; no universal turnaround or outcome is promised.
Related services
Connected where the engagement calls for it.
A structure decision can raise further planning questions and affect the accounting records needed for reporting. Discuss whether either service is relevant; each requires an agreed scope.
Start a conversation
Let’s discuss the work.
Describe the current or proposed entity, ownership and tax treatment, the change being considered and any known dates. CTAS can discuss a tax review and the information required; involve legal counsel for formation, governance and ownership matters.
Keep an initial inquiry general. Please do not send account numbers, tax returns or other sensitive records.