You’ve wanted to start a business for a while now, but you have a big question — Should I start a partnership with a few associates or a corporation with numerous shareholders? It’s a great point to consider, so we’ll go over some basics based on a recent article from Bradford Tax Institute.
Choosing to form a partnership with multiple business associates can have positive results, such as deducting partnership losses, eligibility for tax deductions and special allocations, and more. However, things can get tricky with partnerships as well. Some negatives to a business partnership could include complicated tax allocation rules, disguised sales rules, and fringe benefit tax rules.
If you’re interested in a partnership with multiple associates, a limited partnership might be a good path for you because you can reap the benefits of a partnership without the same liabilities. Often, the most you can lose is what you gain from the investment, but there are also some negatives. For example, limited partners can lose liability protection, among other disadvantages.
No matter what you decide, you’re going to have to develop plans and contracts to ensure you’ve covered your bases. If you need help with tax planning for a business partnership or you simply have questions regarding your options, we can help you!
Integrated Accounting & Tax, LLC is a woman-owned accounting firm with services tailored to each client’s unique needs and goals. We guarantee that every service we provide is essential and propels your goal.
Contact us today for a free tax services consultation. We have locations in Prior Lake, MN, and Ft. Lauderdale, FL, and can provide service to surrounding areas.