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Today's post highlights some important distinctions between corporations and LLCs to help you choose the right entity structure for your company.

It’s important to understand the significant (and sometimes subtle) differences between the various choices when determining the right entity structure for your new venture. Today’s post details some important distinctions between corporations and LLCs.

The Distinction Between State Entities vs. Federal Tax Elections 

For state law purposes, there are two primary entities that the choice of entity generally comes down to: corporations and LLCs. Corporations and LLCs both offer limited liability to owners of the company. This means that (absent extraordinary circumstances) if the business is sued, only business assets are at risk and the ownerss personal assets will be shielded from the company’s liabilities.

For federal tax purposes, there are three primary tax classifications that most companies are organized under: C corporations, S corporations, and…

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Liability shield

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The LLC entity offers a ton of flexibility for its Members. But can LLC Members pay themselves a salary? Yes, if they elect to be taxed as Corp.

As we’ve discussed in previous posts, the limited liability company (LLC) entity offers a ton of flexibility when organizing the management and economic structure of the company. Because of this flexibility, the LLC has quickly become the most popular entity to form when seeking limited liability protection for new businesses. One question that often crops up is, “Can I pay myself a salary as the owner of a LLC?”

Can LLC Members Pay Themselves a Salary?

The short answer is: It depends on how the LLC is taxed.

LLC Taxed as a Partnership

For tax purposes, a LLC is by default a pass-through entity—i.e. any money that comes into the business will “pass-through” to the individual members of the company regardless of whether they receive…

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LLC Member Salary

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One important consideration when forming your LLC and considering your entity structure: whether to elect to be an LLC taxed as an S corporation.

As we’ve discussed in previous posts, the limited liability company (LLC) entity offers a ton of flexibility when organizing the management and economic structure of the company. Because of this flexibility, the LLC has quickly become the most popular entity to form when seeking limited liability protection for new businesses. Below we’ve highlighted one important consideration when forming your LLC: whether to elect to be an LLC taxed as an S corporation. 

Distinction between LLC and S Corporation

It is important to understand the distinction between an LLC and a S corporation. An LLC is a specific type of limited liability entity that is governed by state statutes and offers the owners (also known as “members”) limited liability protection when conducting business…

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Choice of Entity

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Today’s post continues our series on choosing the right business entity, highlighting the characteristics of LLCs and corporations.

In our first post in this series on choosing the best entity for your new business we explored sole proprietorships and partnerships. Today’s post will highlight two additional business entities: the limited liability company (LLC) and corporation.

Flexibility is Key for the LLC

An LLC is a legal entity in which one or more individuals (“members”) have limited liability for the business’ debts and obligations even if they participate in management of the company. Members of an LLC have great flexibility in structuring the operation and management of their venture through the LLC’s governing document, known as an operating agreement. If the LLC does not draft an operating agreement, its activities will be governed by state statute.

For tax purposes, an LLC is…

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Flexibility of LLCs

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This post highlights the importance of complying with the business and occupation tax in WA State, as illustrated by the court's ruling against Space Age.

A recent court of appeals case highlighted what happens if you don’t pay your business and occupation tax (B&O tax) to the state of Washington. In Space Age Fuels v. State of Washington, Space Age argued that the dormant commerce clause prohibits Washington from taxing its activities because they lack a substantial nexus with Washington. The dormant commerce clause is implied under Article I of the United States Constitution and prohibits a state from passing legislation that improperly burdens or discriminates against interstate commerce. The court of appeals disagreed with Space Age and affirmed the lower court’s ruling denying a refund of the paid B&O tax. If you do any business in WA, it may make sense (after this case)…

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These trusts allow you to transfer ownership of your assets to the trust while still retaining possession and use of your assets while you're alive.

Perhaps you’ve heard the term “revocable living trust.” Its increasing popularity has made it a frequent topic of conversation among tax and estate planners. As daunting and complicated as the term may sound, the process of creating a revocable living trust is actually quite simple. This type of trust allows you to transfer ownership of your assets to the trust while still giving you the right to possess and use your assets while you’re living. Furthermore, these trusts enable you to ensure your estate does not pass through probate upon your death. It may sound crazy to most—give up ownership of all of your property? It’s really not as crazy as it may sound. Read on to find out why…

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We continue our series on the purchase and sale of a business by highlighting the key features and differences between asset sales and stock sales.

We continue our series on the purchase and sale of a business by exploring the structure of the transaction. These transactions generally fall under one of two categories, an asset sale or a stock sale. Today’s post highlights some of the key features and differences between the two structures.

The Asset Sale
An asset sale is the purchase of the individual assets and liabilities of the business. In an asset sale, the seller will retain possession of the legal entity, e.g. ABC Corporation, and the buyer purchases the individual assets of the company, including equipment, inventory, fixtures, licenses, goodwill, trade names, etc. Typically the seller will retain the company cash, and the seller often remains responsible for any long-term debt obligations.

Buyers tend…

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Today's post highlights the most important details and frequently asked questions about reseller permits in Washington state.

It’s important to keep up-to-date on state and local regulations that govern the purchase and sale of goods within Washington state, including which sales taxes may affect your business. Washington no longer uses resale certificates; instead, it requires every business that sells goods at wholesale to apply for a reseller permit to present to vendors. Reseller permits allow you to purchase goods (or services) that you intend to resell without having to pay retail sales tax on the original purchase. If you run a business that purchases items that you are intending to resell, you should obtain a reseller permit in order to avoid any unnecessary tax consequences for your purchases. Today’s post details some of the key issues that surround…

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Last week, the annual green energy conference convened in Las Vegas to discuss expanding renewable energy efforts in the U.S.

Last week, the annual green energy conference convened in Las Vegas to discuss expanding renewable energy efforts in the U.S. Democratic Senate Majority Leader Harry Reid and Interior Secretary Ken Salazar opened the discussion with the announcement that a 12-square-mile wind energy farm in White Pine County, a rural county located in Nevada, will begin producing electricity.

Thus far, U.S. renewable energy efforts have fallen behind those of other countries. Former President Bill Clinton closed out the discussion last Tuesday, recalling the loss of Senate support for the 1997 United Nations Framework Convention on Climate Change. As a result, the U.S. never ratified the treaty that aimed at cutting greenhouse gas in the atmosphere. Clinton noted that in order to make…

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Trademarks

Hershey’s Granted Trademark for Bar Configuration
The US Patent and Trademark Office’s (USPTO) Trademark Trial and Appeal Board granted Hershey’s trademark application for the design and shape of its chocolate bar. The Examining Attorney for the USPTO had refused registration on two grounds: (1) Hershey’s proposed mark was a functional configuration of the goods; and (2) it was a non distinctive configuration that had not acquired distinctiveness as required under Trademark Act Section 2(f), 15 U.S.C. § 1052(f). The Trademark Trial and Appeal Board overruled the examining attorney, finding that the configuration was not functional, and that it was sufficiently distinctive.

Hershey’s Trademark Application
Hershey’s description of its mark: “The mark is a configuration of a candy bar that consists of twelve (12) equally-sized recessed rectangular…

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