VIEWS: 3 PAGES: 3 CATEGORY: Business & Economics POSTED ON: 6/3/2010
Michael Hov-destad, associate and corporate attorney with the Marlton-based law firm of Parker McCay, says he sees "large concentra-tions" of businesses forming LLCs to buy commercial and residential real estate, whereas a year ago, consulting businesses dominated new formations. Forming a partnership also offers business owners the pass-through income tax benefit, and it allows for an unlimited number of partners, Navani says, but its owners don't enjoy the limited-liability protection of an LLC.
TAX PLANNING Staying Below The Audit Radar Sales-Tax Traps Snare Smarter Structure Saves in Legal, Unsuspecting Companies DELAYS, FORGETFULNESS and last-minute rushes are not among the traits the Internal Revenue Service relishes among taxpayers, Tax Arenas Steven J. Dundas according to Mickey Guer- Owners should weigh liability riero, partner and chair of and record-keeping issues the tax practice group at the Morristown-based law firm By Shankar P. Day Pitney. Guerriero says delays in filing unemployment tax THE CORPORATE STRUCTURE a business chooses has both returns, sales taxes and taxation and legal implications, so it’s critical for owners con- quarterly estimates of tax lia- cerned about their companies’ bottom lines to examine how bilities tend to raise red flags. their operations are set up, industry insiders say. “If they are not getting From a tax-planning standpoint, there are four main types those returns, it would create of incorporation: sole proprietorship, a partnership, an S corpo- some kind of disturbance in ration and a C corporation. their computer system,” he A sole proprietorship has a single owner, and is the simplest says. “What happens in such structure, according to Vinay Navani, a principal at Wilkin & situations is the tax authority Guttenplan, an accounting and consulting firm in East will generate estimated Brunswick. Such an entity is not required to file a separate tax assessments that they think return — a sole proprietorship’s income is included in its you should have paid — and Mike Hoffman, senior tax manager at Withum, Smith & Brown, says Web-based transactions can make sales- owner’s tax filing, he says. add interest and penalties.” tax regulations difficult to determine, because it’s hard to pinpoint the state in which the sale was made. “Most people who are not sure if their business will be suc- Guerriero says with cessful choose a sole proprietorship; it’s the easiest to set up,” many states moving toward Navani says. However, such businesses are required to maintain electronic filing, delays could Web-based transactions can blur the line for sales-tax regulation trigger alerts in the tax Shutterstock.com By Martin C. Daks authorities’ databases. He Reduce Your Chances says they are especially sen- sitive to delays in filing AS BUDGET-STRAPPED politicians look for new
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