The business that I am forming is a lifestyle management company with me as
the only employee at present. Would eventually like to hire associates. Any
information would be most appreciated.
You should talk to a tax person about this. I formed an S Corp and honestly I
regret it; too much trouble for a small business. In some states (like
California) regardless of what state you used to form the corp, they have a
minimum annual tax (about $800 in CA regardless of your sales volume). My
personal view is that unless you are in an industry with incredible liability
risk, it's better to just be a sole proprietor and buy yourself an umbrella
business insurance policy to cover yourself for liabilities. If you grow
quickly and begin to do ongoing business, then look at an S Corp or other
more complex business arrangement. P.S. I'm not an accountant; this is just
my opinion. Good luck!
Generally, the LLC is preferred by smaller based businesses because they have
less formalities and offer more flexibility than corporations. For example,
corporations have to hold regular meetings held by the board of directors and
the shareholders, whereas LLCs do not have this requirement. Although, both
of these business structures will offer pass-through tax treatment with the
IRS, your state taxes could vary dramatically. I would highly recommend
speaking to an accountant to see what your state tax liability would be under
each business structure.
kmurray | Community Moderator |
5/22/2012 - 9:39 am
Hi,
Check out this blog post for some insight on choosing between an LLC and S Corp. This page on our site also provides information that can help you decide.
email_marketing | Performer | 6/4/2012 - 9:50 pm
regret it; too much trouble for a small business. In some states (like
California) regardless of what state you used to form the corp, they have a
minimum annual tax (about $800 in CA regardless of your sales volume). My
personal view is that unless you are in an industry with incredible liability
risk, it's better to just be a sole proprietor and buy yourself an umbrella
business insurance policy to cover yourself for liabilities. If you grow
quickly and begin to do ongoing business, then look at an S Corp or other
more complex business arrangement. P.S. I'm not an accountant; this is just
my opinion. Good luck!
CorpGirl2012 | Window Shopper | 6/1/2012 - 12:06 pm
less formalities and offer more flexibility than corporations. For example,
corporations have to hold regular meetings held by the board of directors and
the shareholders, whereas LLCs do not have this requirement. Although, both
of these business structures will offer pass-through tax treatment with the
IRS, your state taxes could vary dramatically. I would highly recommend
speaking to an accountant to see what your state tax liability would be under
each business structure.
kmurray | Community Moderator | 5/22/2012 - 9:39 am
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