S-Corporation or an LLC?
One of the most commonly asked questions is whether someone should form a corporation or an LLC. You can find all kinds of advice online, but nothing substitutes from a dialog with a business law attorney that has experience and your best interests in mind.
S-Corp
- Liability Protection
- Pass Through Taxation
- Shareholder Draws are not subject to payroll taxes
- Draws must be pro-rata to ownership
- Only one class of stock
- All owners must be US Citizens
- No more than 100 owners
- Potential negative tax consequences on sale of real estate owned by a corporation
- and more pro's and con's...
Closely-Held S-Corp
If your business will have less than 35 owners and meets all the requirements for an S-Corp then you can elect to be Closely-Held. This election allows you, upon written agreement, to forgo annual meetings and minutes without adding personal liability.
- Ask for more info on this election for small business owners!
LLC
- Liability Protection
- Pass Through Taxation
- Gross Receipts Fee based on revenue not profit. See: FTB
- Few formalities and no required meetings or minutes
- Flexibility in how to pay owners
- and more pro's and con's...
Lean more about the process of forming an entity here: The Process
Or, if you're ready: