Business Entity Tax Classification Tool

This interactive tool will help you understand the tax classification options for your business entity and provide recommendations tailored to your specific situation.

The IRS treats different business structures differently for tax purposes. Choosing the right tax classification can significantly impact your tax burden, liability protection, and administrative requirements.

Note: This tool provides educational information and does not constitute tax advice. Always consult with a qualified tax professional before making decisions about your business entity's tax classification.

Basic Business Information

Business Name

Current Business Entity Type

Number of Owners/Members

Primary Business Category

Business Details

Projected Annual Revenue

Current or Expected Profitability

Number of Employees (excluding owners)

Business Liability Risk Level

Tax and Financial Priorities

Which of the following is most important to you?

Tax Simplicity and Minimal Paperwork

Keeping tax filing and compliance as simple as possible.

Maximizing Tax Savings

Finding ways to legally minimize overall tax burden.

Liability Protection

Protecting personal assets from business liabilities.

Attracting Investment

Setting up a structure that appeals to outside investors.

Do you plan to reinvest most profits back into the business?

Yes

I plan to reinvest most profits to grow the business.

I plan to distribute most profits to owners.

Do you need to provide fringe benefits to yourself or employees?

Yes

Health insurance, retirement plans, etc. are important.

Not a priority at this time.

Future Business Plans

What are your growth plans for the next 3-5 years?

Remain Small/Stable

Maintain current size and operations.

Moderate Growth

Grow steadily but cautiously.

Rapid Expansion

Aggressively grow and scale operations.

Do you plan to seek outside investment?

Self-funded or traditional financing only.

Possibly

Might seek angel investors or venture capital.

Definitely

Actively planning to seek investors.

Are you considering selling the business in the next 5-10 years?

Yes

Planning for potential exit and sale.

Plan to keep the business long-term.

Unsure

No specific exit plans at this time.

Your Tax Classification Recommendations

Summary of Your Business

Based on the information you've provided, here's a summary of your business profile:

Recommended Tax Classifications

The following recommendations are based on your specific business situation:

Entity Comparison

Here's how different tax classifications compare for your business:

Features	Sole Proprietor	LLC (Default)	LLC (S-Corp)	C Corporation	S Corporation
Taxation Method	Pass-through (Schedule C)	Pass-through	Pass-through with salary considerations	Corporate tax rate + dividend tax	Pass-through with salary considerations
Self-Employment Tax	On all profits	On all profits	Only on salary	None	Only on salary
Liability Protection	None	Strong	Strong	Strong	Strong
Paperwork/Complexity	Minimal	Moderate	High	Highest	High
Fringe Benefits	Limited	Limited	Moderate	Extensive	Moderate

Required Tax Forms

Based on your recommended classification, you'll need to be familiar with these tax forms:

Next Steps

To move forward with your tax classification:

Disclaimer: This tool is for informational purposes only and does not constitute tax, legal, or professional advice. Business entity selection and tax classification decisions should be made in consultation with qualified professionals.