Why Set Up an Entity by the End of the Year?

create entity before year ends

By Garrett Sutton, Esq.

As the year closes it is time to start forming the corporations and LLCs you need for next year. We can form them for you in December and have them ready to go January 1st.

Why not just form them in January?

Well, here are the issues. First, if you do any business outside that entity while it is being formed you are personally responsible. Better to have the entity in place right at the start. And second, you would need to file two tax returns for 2017 – one as a sole proprietor for operations outside the new entity and then one as the entity itself.

When we create an entity in December, so it’s ready to go in January, we don’t need to file a tax return for 2016. The Company is in its ‘organizational phase.’ But if you want an extra year for business credit purposes filing a zero return is very easy and inexpensive.

As well, you won’t be paying extra corporate fees for 2016. Most states bill on an annual basis, meaning, for example, you won’t owe Wyoming’s $50 fee until next December. Even California, which charges on a yearly basis, won’t charge you for 2016 if you file after December 15th. You’ll just owe the total for 2017.

So give us a call at 1-800-600-1760 and we’ll get you properly structured and set up for all the good things to come in 2017.

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