INFORMATION ON STARTING A BUSINESS - THE FIRST STEP

We are often the first professionals contacted by both clients and non clients looking for guidance on starting a small business. We want to explain that while we are here to help where appropriate, we should be the second contact for information rather than the first. And here is why.

We are strictly tax attorneys. Both of us are Certified Specialists in Taxation Law. As such, we have a very narrow range of practice outside of court, specifically individual income tax. At the tax planning and tax preparation level we represent only individuals. We do not do tax planning for, nor tax returns for, multi-member LLCs, corporations, or partnerships.

While we are familiar with the tax aspects of all of these entities, we limit our involvement in these matters to litigation. Where tax litigation is concerned we will represent any type of client.

But in starting a business, the issues involved in taxation, while certainly important, must take a distant second in consideration to liability. The question of how much tax will be owed is small next to the question of whether conducting your business will place at risk everything you have worked for.

The decision of how best to protect your assets while effectively conducting business requires the analysis of many variables including, but not limited to, the nature of the business, whether or not you have employees, and whether you provide a service or sell a product. None of these considerations are tax related.

Consequently, the first professional to see is a business attorney. The form of entity a business lawyer recommends you adopt will then have an important bearing on the tax consequences that will follow.

If your business attorney recommends you make your business either a single member LLC (and this includes an LLC consisting solely of a husband and wife) or a sole proprietorship our firm will cover all the tax issues involved. If you are an existing client this planning stage will be free of charge. The addition of the business to your personal tax profile will then result in an additional fee when the next tax return is completed.

In the event your new business will be a multi-member LLC, a corporation or a partnership, you will then consult a tax professional familiar with the kind of entity concerned. This professional will complete the necessary separate tax return. All you need do is bring us the K-1 (for an S corporation or a partnership or LLC), or a W-2 ( for a C corporation or an LLC electing to be taxed as a C corporation). This, along with a basis statement will allow us to complete your personal tax return.