Account Setups — Choosing the Right Entity Structure
What This Video Covers
The decisions you make when you set up a business — what entity you form, how you register with the IRS and your state, how you separate personal and business finances — will follow you for years. Get them right at the start and you build on a solid foundation. Get them wrong and you spend time and money correcting structural problems that should never have existed in the first place.
Key topics addressed include:
- Sole proprietorship, LLC, S corporation, C corporation and partnership — when each one makes sense
- The tax implications of each entity choice
- How and when to obtain an Employer Identification Number (EIN)
- State and local tax registration requirements
- Payroll tax accounts and withholding obligations
- Sales tax registration — who needs it and when
- Separating personal and business finances
- Recordkeeping requirements the IRS expects you to meet
New York auditors are experienced at identifying taxpayers who claim to have left the state but maintain significant connections here. If your situation involves a recent move or dual residency, this video is for you.
Why This Matters
Choosing an entity is not a formality. It determines how your income is taxed, what employment taxes you owe, how much personal liability you carry and what happens to the business if your circumstances change. There is no single “best” entity. There is only the entity that fits your situation — your income level, your industry, your growth plans and your risk tolerance.
About the Presenter
Benjamin A. Goldburd, Esq.
Goldburd McCone LLP
Benjamin brings focused experience in IRS collection defense, including lien and levy disputes, CDP hearings and negotiated resolutions. Our team’s combined backgrounds in accounting, business and wealth management ensure that enforcement responses account for the full scope of a client’s financial position.
Frequently Asked Questions About Business Account Setups
Do I need an attorney to form an LLC or corporation?
You can file formation documents yourself through your state’s secretary of state office. But forming the entity is only one piece of the setup. The entity selection decision itself — which structure minimizes your tax burden and fits your business model — is a tax question, not a paperwork question. An attorney ensures the entity type is correct for your situation, the operating agreement is drafted properly, and the federal and state tax elections are made on time.
What is the difference between an LLC and an S corporation?
An LLC is a state-law entity. An S corporation is a federal tax election. A single-member LLC is taxed as a sole proprietorship by default, and a multi-member LLC is taxed as a partnership. Either type of LLC can elect S corporation tax treatment by filing Form 2553 with the IRS. The S election allows the owner to split income between salary (subject to employment tax) and distributions (not subject to employment tax) — which can produce meaningful savings at the right income levels.
When should I consider S corporation treatment?
S corporation treatment begins to produce tax savings when net business income consistently exceeds the cost of running payroll and filing the additional corporate return. For most businesses, that threshold falls somewhere in the range of $50,000 to $80,000 in annual net income — though the right number depends on your industry, your state and your specific circumstances. Below that range, the compliance costs often outweigh the savings.
What happens if I miss the S election deadline?
The IRS provides late election relief under Revenue Procedure 2013-30 for entities that intended to elect S status but missed the filing deadline. The relief is available if the entity meets certain requirements — including that it has been operating consistently with S corporation treatment.