Bookkeeping and Accounting Setup
Assess whether your new business has a bookkeeping system, chart of accounts, and process to keep clean records from the start.
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For founders, new owners, and anyone starting out
Entity Tax Election Readiness
Screen how your new entity could be taxed (disregarded, partnership, S-corporation, or C-corporation), whether an S-election may fit, and what to prepare before electing.
6 guided steps
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Official guidance links
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Your free guided checker
Answer a few quick questions below. It is private - nothing is submitted or stored - and takes about a minute.
Informational business-formation diagnostic only; not legal, tax, accounting, or investment advice. Confirm entity, tax, and state decisions with a qualified attorney and CPA.
The questions this tool walks you through
Here is what the checker asks and why each step matters. Prefer to talk it through? Contact us and we will help directly.
Do you plan to raise venture or angel equity, or grant stock options to employees, within the next few years?
Institutional investors and standard option plans are built around C-corporation stock, and S-corporations cannot have those shareholders or a second class of stock.
Keep C-corporation taxation and preserve QSBS eligibility from day one.
Official guidance: IRS business structures
Will the business retain most of its profit inside the company to fund growth, rather than distributing it to the owners each year?
Pass-through entities tax owners on profit whether or not it is distributed; a C-corporation lets earnings stay taxed only at the corporate rate until paid out.
Model C-corporation taxation against pass-through before you commit.
Official guidance: IRS business structures
Do you expect net profit above roughly $50,000 a year, per active owner, after paying each active owner a reasonable salary?
Above that rough range, taking part of the profit as distributions instead of salary can cut self-employment and FICA tax by enough to outweigh payroll and compliance cost - commonly cited, confirm your numbers.
Use the interactive tool above to see how this applies to your situation.
Official guidance: IRS business structures
Is every owner a U.S. citizen or resident individual (or an eligible trust or estate), with no partnership, corporation, or nonresident among them?
An S-corporation is limited to at most 100 eligible U.S. shareholders and a single class of stock; one ineligible owner or a second class of equity blocks the election.
Stay a partnership and use a written operating agreement for the economics.
Official guidance: IRS business structures
Can you run formal payroll for the active owners and pay each of them a defensible market salary before taking distributions?
The S-corporation savings only hold if owners are on real payroll at reasonable compensation - the area the IRS most often challenges - so you need the payroll and bookkeeping to support it.
Elect S-corporation treatment on Form 2553 and run compliant payroll. Stay a partnership and revisit the S-election once payroll is in place.
Official guidance: IRS business structures
Will the business have more than one owner?
A single owner defaults to a disregarded entity taxed on Schedule C; two or more owners default to partnership taxation with a separate information return and Schedule K-1s.
Keep default partnership taxation and set the economics in an operating agreement. Keep default disregarded-entity taxation on Schedule C for now.
Official guidance: IRS business structures
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