Year-End Entity Structure Review: Are You Set Up for Success in 2025?

As the year comes to a close, now is the perfect time to pause and review your business’s legal structure. Why? Because the right entity can do more than just keep you compliant. It can lower your tax bill, protect your personal assets, and open the door to new tax incentives.

Why a Review Matters:​
• Tax laws and incentives change every year
• Your business income, size, or goals may have shifted
• The wrong entity could mean higher taxes or more risk

Quick Breakdown of Entity Options:​
• Sole Proprietorship: Simple, but no liability protection.
• Partnership: Pass-through taxes, but still no liability protection (unless LLP).
• LLC: Liability protection plus flexible tax treatment.
• S Corporation: Avoids double taxation, with savings on self-employment tax.
• C Corporation: Separate taxpayer, ideal for raising capital and scaling.

Example in Action:​
Sarah runs a consulting business as an LLC taxed as a sole proprietorship. All her profits are subject to self-employment tax. By electing S Corp status, she can pay herself a salary (taxed normally) and take additional profit as distributions (not subject to self-employment tax), potentially saving thousands.

Questions to Ask Yourself Before Year-End:​
• Has your income changed significantly?
• Do you want to bring in partners, employees, or investors?
• Are you planning to sell the business or expand?
• Do you want to leverage new tax incentives in your state?

If you answered yes to any of these, a quick review could be a game-changer.

Action Steps Before December 31:

1. Review your structure with your CPA or attorney.
2. Estimate your 2025 income and tax liability.
3. Check for new credits and incentives in your state.
4. Decide on any changes early enough to be effective in 2025.

The Risk of Waiting:​
Skipping this review could mean:
• Paying more taxes than necessary
• Missing out on valuable credits
• Exposing personal assets to business risks
• Facing roadblocks when bringing in partners or selling your business

Closing Line:​
A quick conversation now could mean big savings and peace of mind in 2025. Do not wait until it is too late. Review your entity structure before year-end.
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Schedule Your Year-End Entity Review