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November 23, 2021

St. Louis Inno Partnership: Tax Impacts Startups Should Consider Before Making an Entity Selection

While entity selection may not seem like the most important or exciting decision an entrepreneur will make for their startup, choosing the right entity can make a world of difference down the road. In part one of our two-part series for St. Louis Inno on entity planning, we started comparing LLCs and C-corps from the perspective of startup tax losses, annual tax reporting and tax treatment for profitable companies. In part two, Dave M. Finklang, CPA/CGMA, MBA, Partner + Tax at Anders digs into the effects of double taxation, the tax impact of selling ownership for these two entity types and key tax savings benefits for certain startup company stock.

The article starts by explaining tax benefits of LLCs and C-corps when an entrepreneur decides to sell ownership. Dave explains, “For C-Corporation owners, there is a significant tax benefit for owning Qualified Small Business Stock, which is stock of a qualifying small business corporation. If the owner holds their stock for at least five years, they can sell the stock and avoid paying tax on the first $10,000,000 in gain on the stock.

Learn more about the tax effects of deciding between LLC or C-corp by reading the full article: LLC or C-Corp? Tax impacts startups should consider before making an entity selection.

Anders is a proud founding partner of St. Louis Inno, a digital media platform that will serve as the region’s portal for news, profiles and insight into the region’s burgeoning innovation ecosystem. Learn more about St. Louis Inno.

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