Lee was engaged in a self-employed hardware business for many years. It earns money and he wants to expand its scale. He wants the hardware business to be conducted independently. Whether he should apply for setting up a limited liability company or a sole proprietorship?
He is a sole proprietorship - Lee Investment, without considering the tax issues, such establishment can still apply to set up a limited liability company, or he can set up a sole proprietorship enterprise.
In order to minimize tax payment, it needs the form of corporate of organization for tax planning.
Under the current personal income tax and corporate income tax policy:-
( A ) a sole proprietorship and partnership enterprises do not levy corporate income tax, personal income tax, but only for individual investors;
( B ) the company is required to pay corporate income tax, individual investors who receive dividends from the company and will also be required to pay personal income tax. That is, for the limited liability company, it requires to pay this form of income for tax twice.
From the above analysis, for an individual investor, it is prepared to set up small businesses, the best set up is a sole proprietorship or partnership enterprises. The establishment of a limited liability company's tax burden is relatively heavier.