Tax Considerations in Choosing and Forming a Business Structure or Entity

Factors affecting the “choice of entity” can (should) include:

1. Owner liability;
2. Owner control and participation in management;
3. Reporting and taxation of income;
4. Changes in ownership – withdrawal, retirement and the like;
5. Allocations of profits and losses;
6. Rights among owners with respect to dispute resolution; and
7. Licensing (e.g., LLCs in California).
8. Under California law, providers of “professional services” generally cannot (legally) form an LLC.

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