Introduction
Starting a business in 2025 means making smart decisions early—especially when it comes to choosing the right business structure. This choice impacts your taxes, legal exposure, and funding opportunities. The most valuable tip:
Select the right entity structure before registering your business.
Proven Tip: Choose the Right Entity Structure Before You Register
Each business structure has different tax consequences:
- LLC: Simple setup with flexible taxation
- S Corporation: Helps reduce self-employment taxes
- C Corporation: Ideal for growth and investors but may face double taxation
- Partnership: Great for multiple owners but needs proper income allocation
Choosing the right structure before you register helps avoid complications and restructures later.
IRC Tax Code References
- IRC §1361-1379 – S Corporation rules and requirements
- IRC §7701(a)(3) – Definitions of various business entities
- IRC §351 – Rules for tax-free transfers to corporations
- IRC §701-704 – Partnership income allocation rules
- IRC §11 – Corporate income taxation
Relevant IRS Forms
| Form | Purpose |
|---|---|
| Form SS-4 | Apply for Employer Identification Number (EIN) |
| Form 2553 | Elect S Corporation status |
| Form 8832 | Elect or change entity classification |
| Form 1065 | File partnership income tax return |
| Form 1120 | File C Corporation tax return |
| Form 1120-S | File S Corporation tax return |
Example: Choosing the Right Structure Saved $12,000
A consulting firm in New Jersey was planning to register as a C Corporation in 2024. After professional consultation, they chose an LLC taxed as an S Corporation and filed Form 2553 within 75 days of incorporation. By taking a reasonable salary and treating the rest as shareholder distributions, they saved over $12,000 in self-employment taxes during the 2025 tax year.
Step-by-Step Guide to Register Your Business in 2025
Step 1: Consult a Tax Professional
Review your income goals, ownership structure, and liability concerns with a CPA.
Step 2: Decide on Your Business Entity
Common options include Sole Proprietorship, LLC, Partnership, S Corporation, and C Corporation.
Step 3: Register with the Secretary of State
Choose a state for registration based on taxes, compliance, and operational flexibility.
Step 4: Apply for an EIN
Use IRS Form SS-4 to request your federal Employer Identification Number.
Step 5: File Entity Classification or S Corp Election
Use Form 8832 if electing a corporate status or Form 2553 to become an S Corporation.
Step 6: Open a Business Bank Account
Use your registration documents and EIN to set up a separate bank account for business use.
Step 7: Maintain Ongoing Compliance
File annual reports, issue K-1s (for partnerships and S Corps), and stay up to date with federal and state filings.
Conclusion
Choosing your business structure is one of the most important decisions you will make as an entrepreneur in 2025. It determines your taxes, liability, and how easy it will be to raise capital or bring on partners. Making the right choice before you register is the smartest move you can make.
Call to Action
To ensure your business starts on the right path, schedule a consultation with Anshul Goyal, CPA EA FCA. He can guide you through entity selection, IRS form filings, and long-term tax strategies.
To schedule a meeting, contact Anshul directly at anshul@kkca.io.
Disclaimer
This blog is intended for informational purposes only and does not constitute legal or tax advice. Please consult a certified public accountant or tax advisor for personalized recommendations.
FAQs
1. What is the best entity structure for tax savings in 2025?
In many cases, an S Corporation offers good tax savings for service-based businesses with stable income.
2. Do I need to file Form 2553 if I start an LLC?
Only if you want your LLC to be taxed as an S Corporation. Otherwise, it remains a disregarded entity or partnership by default.
3. Can I change my business structure later?
Yes, but you may face tax consequences or added filing requirements. It’s best to choose the right structure from the beginning.
4. How long does it take to get an EIN?
You can receive your EIN immediately upon submitting Form SS-4 online or within four weeks if submitted by mail or fax.
5. What’s the difference between an LLC and a C Corp?
An LLC is a flexible legal entity that can be taxed in various ways, while a C Corp is a standard corporation subject to corporate tax under IRC §11.
About Our CPA
Anshul Goyal, CPA EA FCA, is a licensed Certified Public Accountant in the United States, an Enrolled Agent authorized to represent taxpayers before the IRS, and a seasoned cross-border tax advisor. He has helped hundreds of American businesses and Indian founders in the U.S. choose the best structure for tax efficiency and compliance. Anshul represents clients in tax litigation, audits, and entity planning.
To discuss your case, write to Anshul at anshul@kkca.io or schedule a meeting.