Choosing the "right" entity type is a crucial decision for businesses that comes right at the beginning of the entity lifecycle.

Although taxes are a significant driver in determining which entity structure to select, they are far from the only factor to consider, according to Barbara Weltman, author of J.K. Lasser's Small Business Taxes and a contributing author to the Your Income Tax series. "Among the consequences to consider are tax rates, access to capital, liability, nature and number of owners, Social Security and Medicare taxes, restrictions on accounting methods, the owner's payment of company expenses, filing deadlines and extensions, multistate operations, and exit strategy," she said.

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