Tag Archives: LLC

New Entity EIN and Tax Classification

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Philip Falco
New Entity EIN and Tax Classification

This is one of the most important steps that could impact the entire future of your new business. Take your time before applying for an EIN with the Internal Revenue Service. Severe adverse tax consequences could impact the future of your entity.

Name selection. If you choose a name with Corp, or Inc, the default entity will likely be a C Corporation. Taxpayers almost always do not intend on being C Corporations.

If you choose LLC (limited liability company) and you are a sole owner it will most likely default to schedule C on your 1040.

In addition, if you answer questions indicating that you will have payroll, and you very well could, it will trigger the filing of payroll forms typically 940 and 941 with automatic filing dates required, which in turn trigger Colorado state withholding filings, Colorado Department of Labor and Employment, and possibly the Denver Head Tax. In additional, it could trigger worker’s compensation insurance.

Save the letter you get from the IRS CP 575 A for the life of your business.

Tax Tips:

  • Avoid Corp or Inc unless you know exactly what you are doing
  • Be prepared to set up State and local payroll accounts if you have employees
  • Most LLC’s will be on schedule C of your 1040, or form 1065 if you have more than just you as a partner

CFO and Board Service

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Philip Falco
CFO and Board Service

Chief Financial Officer for your company. Given the dual licensing as a Certified Public Accountant and Attorney, this background and 30 years of business experience is a good fit. Your company could add tremendous value in terms of tax guidance, financial planning, and legal guidance.

For larger companies:

-keeping on track of internal audits

-integrating recommendations into policy

-internal fraud prevention and detection

-Legal exposure prevention.

Smaller companies:

-tax compliance and strategy

-legal compliance

-legal structure

Give us a call to discuss (303) 626-7000

Commercial Real Estate holding entity

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Posted by
Philip Falco

Colorado Corporate entity selection is very important.

Setting off on the correct course at the very beginning is worth the investment.  It can save taxes, owner liability and headaches.

There are various types of entities under Colorado statute Title 7. Colorado was one of the first States to enact a Limited Liability Company (LLC) statute.  In fact, the author’s corporation class studied the Colorado LLC statute in 1993.

A Colorado LLC is the most popular Colorado entity and for good reason.

Its purpose is to provide limited liability to members.  Limited liability has dwindled somewhat by way of Colorado Case Law.  There are measures to take to ensure protection.

What is Limited Liability?  This refers to personal liability of a member for entity liabilities.  Entity liability could include liability from third-party personal injury.

There is the Limited Liability Partnership (LLP).

Under Colorado statute, there are several varieties of LLP.  Historically, an LLP was required to have at least one general partner.  An entity can now chose to be a Limited Liability Limited Partnership (LLLP).

There is the Colorado Corporation.

A Colorado Corporation is formed pursuant to C.R.S. §7-90-101, et. seq.  A great advantage of a corporation is its simplicity.

Taxation

Generally, an entity can be taxed as a partnership, a C-Corp (Double Tax), or an S-Corp (flow through).

A Real Estate holding entity usually would chose partnership taxation because of its flexibility.  Other entities chose S-Corp because S-Corps provide more clarity on payroll, and they do, which is very important for tax compliance.

Under the Check The Box regulations, an entity, such as an LLC, can chose the following tax classifications: C-Corp, S-Corp, Partnership.  Under certain rules, an entity is considered a disregarded entity for tax purposes, in which case, taxation is according to Sole Proprietorship rules.

Partners who are Married.

If there are only two partners and they are married, they might very well be considered a disregarded entity by the IRS.  This could throw a wrench in your tax paradigm, so check with a professional to be sure.