Business Formation Lawyer Charlottesville, VA
There is no denying that the COVID-19 pandemic has caused many economic issues in Virginia and across the nation. Many people have found themselves unemployed as jobs and positions have been eliminated because of company closings. While this has caused financial hardships for many, it also may be an ideal time for those who have been considering leaving their jobs and opening their own business. If this is something you are considering, it is important to speak with a business formation lawyer Charlottesville, VA clients recommend from Dale Jensen, PLC Law Firm.
The most critical decision you can make when opening the doors of your own company is deciding what type of business entity selection you want. This is the case whether you are the owner of a single-member LLC or an executive in a traditional corporation. This is especially true given the tax legislation passed by Congress a few years ago.
Limited Liability Corporations
If you are currently receiving income as a traditional employee or freelancer in your capacity as an individual, it may be advantageous to consider registering a Limited Liability Corporation (LLC). It is possible for even one person to register an LLC and receive business income through the entity. In this scenario, the registrant/business owner is typically classified as a single-member owner of the LLC.
Importantly, as a business litigation lawyer Charlottesville, VA companies trust can explain, an LLC is afforded status as a “pass-through” entity with regard to the taxation of income. Income earned by a pass-through entity is not subject to taxation when the income is passed through from the business to the individual. This is different from income earned by a traditional corporation, which is taxed once on the way out from the business to its shareholders, and then again at the individual level.
It is in the area of tax deductions where pass-through status often showcases its values. Income earned by a business may be offset by business investments and losses in the form of tax deductions. Thus, the figure passed-through from the business to the individual may be lower, with regard to taxation, than income that is earned by an employee and/or freelancer and never passed-through from the entity to the individual employee or freelancer.
Experience Navigating Entity Selection
As you can see from the business and legal specifics pertaining to LLCs, entity selection can be quite complex. As such, the knowledge of an experienced Charlottesville, VA business formation lawyer is invaluable in both selecting the entity that is appropriate to your personal and business needs and planning for the tax-related consequences per federal and state tax laws. Contact the Dale Jensen, PLC Law Firm to schedule a free initial consultation. Our firm offers almost four decades of legal experience and knowledge and will help you chose which business direction is best for you and your family.