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Our private client tax services team can help you maintain your business and personal goals while achieving full reporting compliance. Learn more.
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1. Evaluate tax matters with the end business goals in mind.
Begin evaluating tax matters by discussing the structure and goals of your business with a tax advisor, says Monty Korte, Tax Services Partner with Ernst & Young LLP: “What’s going to happen? It could be a generational transition, an IPO, bringing on a partner. Each of those will have its own tax consequences, and you can often position yourself now for better outcomes.”
Integrating tax approaches with business strategies, and planning early, can position business owners for better outcomes. For example, a partnership or LLC often gives flexibility for an organization to take private equity money. Structuring as a C-corp is generally considered advisable for an entrepreneur looking to sell or go public.
If your plan is continued growth, different tax considerations may be at play. “Before the company gets too big, many entrepreneurs consider gifting pieces of it to a trust or kids,” says David Kirk, US EY Private National Tax Partner with Ernst & Young LLP. “Because once the business gets too big, it becomes very expensive to move ownership of the company and owners may worry about creating estate tax problems.”