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I'm starting a new business, and after having found a lawyer and an accountant with excellent reputations I had the following problem; they disagree on the legal type of business that I have to use.

The lawyer claims that going his way will reduce potential liability and create a more flexible corporate structure but the accountant claims that his way will reduce tax.

To whom should I listen? Any advice?

Thanks.

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2 Answers

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It depends a lot on what sort of business are you planning to start, however, my advice is the following, the differences between an LLC, S-Corp, C-Corp, and other entities from a technical standpoint are generally quite finite. However, the differences from a taxation standpoint can be huge.

If you have trust your accountant, I would go that route. Tell your lawyer that this is the direction that you want to go and why and ask him to be really honest with you about the potential consequences.

I hope you find this helpful.

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I would suggest listening to your lawyer or legal advice and your accountant for tax/accounting advice. You don't mention the specifics of their recommendations, but it might very well be possible to get the legal structure your lawyer recommends and the tax structure your accountant recommends. You should ask them about that and see if you can reconcile the difference that way.

In accordance with Treasury Circular 230 (31 CFR part 10), please note: any information contained in this post is not intended or written to be used, and cannot be used, by any taxpayer for the purpose of avoiding penalties that may be imposed on the taxpayer.

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