World Class Mergers & Acquisitions  |  For Companies $5 Million to $100 Million in Revenue

Merger & Acquisitions FAQ – December 2014

Q: Should I incorporate?

A: The three worded, simple question many small business owners ask of us! The legal profession will answer, in blank, “YES!” The accounting profession would generally answer, “Maybe.” Your creditors cringe at the thought. The fact of the matter is that some businesses would just face more burden being incorporated as opposed to operating as a sole proprietorship. Other business owners are crazy for not being incorporated.  You must examine your individual situation to find the best possible business structure.

Q: I just opened a business and formed it as a limited liability company under my state’s laws. For federal tax purposes, how do I classify my LLC?

A: An LLC may be classified for federal tax purposes as a sole proprietorship, a partnership, or a corporation. If the LLC has only one owner, the LLC will automatically be treated as a sole proprietorship unless another election is made by the owner.  On the other hand, if the LLC has two or more owners, it will be classified as a partnership unless an election is made.

Q: How do I deduct expenses from an estate to arrive at the true value of the estate?

 A: The estate can deduct estate expenses from the estate itself using form 706 or it can use form 1041 to deduct expenses from the income of the estate.

By: Basi & Basi at the Center for Financial, Legal and Tax Planning for Transworld M&A Advisors