Entity restructuring can be driven by a need for change within a business model or to restructure to make necessary adjustments to assets and other financial liabilities. At Diener & Associates, we understand the need to change the nature of your business as your company grows and circumstances change. Our team of Certified Public Accountants (CPAs) can help you structure your business in a way that supports your goals and protects your company from legal risk.
Defining Entity Restructuring
Businesses often face both internal and external pressures to change over time. These pressures can make it beneficial for a business to restructure into a different business type. There are multiple ways that a company can restructure. Typical business structures include:
- Sole Proprietor
- Limited Liability Company (LLC)
- Limited Liability Partnership (LLP)
- S Corporation
Choosing the right business entity is important as your choice will impact the success of your business operations. Your business type affects many areas, such as taxes, financing, asset protection, and equity arrangements. Because every business type is different, you must consider the reasons and the advantages of restructuring into a certain type.
Why Some Businesses Choose to Restructure
A business may choose to restructure for a wide range of reasons. Often, a company will find that restructuring can reduce costs. For example, if a company decides to restructure and downsize, they may eliminate redundancies and lower their payroll expenses. Additionally, restructuring an entity can help businesses make better use of their talent.
Companies may restructure for other reasons, such as to concentrate on key accounts or products, merge with another company, or incorporate new technology. In some cases, entity restructuring can also help a business decrease or consolidate debt. CPAs may help businesses identify the reasons for negative performance and suggest possible restructuring solutions.
Benefits of Entity Restructuring
The benefits of entity restructuring can be substantial depending on the reasons for the change. Restructuring often brings financial benefits, such as when a company is attempting to revive its declining business or enhance the value of their organization.
Companies may also restructure to stay competitive. A company may choose to restructure their entity in an attempt to gain a competitive advantage or put their business in a position for exceeded growth. Maintaining a business structure that no longer meets your company’s needs can result in a variety of problems. However, restructuring can often lead to reduced tax liability and a smoother expansion.
How a CPA Can Help with Entity Restructuring
When you contact Diener & Associates for entity restructuring services, you can expect great things. Our team will help you decide the best legal entity for your business and evaluate your existing structure. We will also walk you through the tax implications and potential liabilities you may face. For more information or to get started, contact Diener & Associates by phone at 703.386.7864 or schedule a consultation online.