Adrian JohnsonTLDR:
Alternatives to the Limited Liability Company (LLC) include S Corporations (S Corps) and Benefit Corporations (B Corps). S Corps offer unique tax advantages and flexibility, while B Corps focus on social and environmental impact. Financial advisors must consider eligibility criteria, compliance requirements, advantages, and disadvantages when guiding clients to choose the best business structure for their needs.
Beyond the LLC: Alternate Business Structures in 2024
Staying ahead of the curve in business structuring is key for financial advisors. While the LLC has been a popular choice, exploring alternatives like S Corps and B Corps can better suit clients’ needs. Here are the key elements to consider:
- S Corporations (S Corps):
- Unique tax advantages with pass-through taxation.
- Strict eligibility criteria and compliance requirements.
- Advantages include tax savings, liability protection, and credibility.
- Disadvantages include shareholder limitations, IRS scrutiny, and potential tax rate issues.
- Benefit Corporations (B Corps):
- Focus on social and environmental impact along with financial success.
- Legally obligated to consider stakeholders’ interests beyond shareholders.
- Certification through B Lab with compliance obligations and reporting requirements.
- Marketing clout as socially responsible businesses.
Financial advisors play a crucial role in helping clients make informed decisions by assessing goals, risk tolerance, tax implications, ownership structure, compliance obligations, and long-term viability. Empower clients with personalized recommendations to set their businesses up for success.
