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solo, S-corp , or LLC???

by matthewwaites, Performer

  • Created: October 6, 2009, 12:33 pm
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7 comments

We are a young couple wanting to open a  retail cart in a mall selling a variety of items. We live in Tennessee and not sure what is the best path when it come to taxes for us. Solo, S-corps, or LLC.  we don't want to be hit hard on taxes. One of us will stay employed at our job and the other run the store as our new job. Any help?

Tags: Discuss Popular Topics, Starting & Registering a Business
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NicoleD | Former Moderator | 2/4/2010 - 3:54 pm

Of the many business entities that owners consider, Limited Liability Companies (LLCs) and Subchapter S Corporations (S-Corps) are two of the most popular. Although they share the distinction of being 'pass-through' entities in addition to providing liability protection, they do have several differences. An owner must also consider operational ease, administrative requirements, profit-sharing and employment tax implications. Before choosing one or both of these options, determine which features are most important to you and your company. The needs of every business are different so it's worth an hour or two with a knowledgeable attorney to investigate all of the issues that will affect it. You can read a break down of these entities in this Business.gov article:

ChristineL | Former Moderator | 2/2/2010 - 1:17 pm

Duplicate post has been moved.

brandons | Creator | 2/1/2010 - 3:39 pm

#1 - always consult a local professional when dealing with services you might need. Ok , now that I've issued my disclaimer , here goes. For me , I went with a corporation , the reason for this was due to the fact that I plan on selling stock in the future. There are *some* tax benefits with holding a corporation that you can ask your accountant on. Having said this , I would say 80% of people are more than happy with a LLC , as they're pretty great to have. Never the less ,I'd make sure you go with some sort of legal protection (whether it be corp or LLC) just for liability's sake. Brandon S. 1337 Ventures Inc Form New York LLC --- This post was edited to remove a commercial link. Read our discussion policies for more Community best practices. Message Edited by ChristineL on 02-10-2010 03:32 PM
Professional Web Site: http://new-hiphop-songs.com/hotnewhiphop

mattdot | Window Shopper | 1/30/2010 - 9:53 pm

The main reason to have a corporation (including s-corp) over an LLC is if you are seeing investors and/or are planning to take the company public. As far as tax status goes, you can do almost everything with an LLC that you can do with a corporation. An LLC can elect to be taxed as a C-Corp or S-Corp, so there is no tax advantage to having a corporation. There are really 2 choices to make. #1 the legal entity and #2 the tax status you want. For more information read here: http://ask.automatemysmallbusiness.com/questions/4b3b9a1f508f2/llc-vs-s-... --- This post has been unlinked. Read about Community Best Practices here. Message Edited by ChristineL on 02-01-2010 11:23 AM

BizResearcher | Window Shopper | 10/6/2009 - 3:17 pm

The bigger issue, rather than taxes, is protecting you from personal liability. If you are a sole proprietor, then the liabilities of the business are your liabilities and the profit from the business is considered income for you. Therefore, if anything should happen, your personal assets could be in jeopardy. If you are an LLC, your personal assets are protected from liability. You can still choose to report your profit or loss on a Schedule C with your personal taxes. Becoming an S-corp also protects your assets, though the tax reporting requirements are a bit different.

Hays_Legal | Performer | 2/2/2010 - 1:17 pm

I think virtually everything has been covered here; but I'll go ahead and add my thoughts.   Almost every business owner should have a business entity to protect the individual owner(s) from liability. Operating as a sole-proprietorship is almost always a bad idea considering the relatively small cost of setting up an LLC or corporation.   If you're considering an S-corp only for its potential tax benefits, go with an LLC. With an LLC, you can elect to be taxed as an S-corp, so S-corps do not have any tax advantages that LLCs do not have. LLCs are generally simpler to set up and they allow more flexibility to the owner(s).   Many people are tempted to set up the entity themselves, but you would be wise to hire an attorney or CPA set up your entity. It's not too expensive and you can be sure it's done right.   Good luck!   Christopher Hays HAYS LEGAL, L.L.C. http://www.lvnvlegal.com http://www.thinkbiglegal.com
Professional Web Site: http://www.thinkbiglegal.com

jbeidle | Contributor | 10/7/2009 - 1:42 pm

An LLC is not a tax status. An LLC is eligible to be taxed as a sole proprietorship, a partnership if there are multiple members who are not married to each other, an S-corporation or a C-corporation. If you live in a community property state there may be little tax benefit to having S-corp tax status as long as your spouse is w-2. If you choose an LLC for liability purposes you will be taxed as a sole proprietor unless you make an election to be taxed otherwise. This may be sufficient until you see your revenues grow.
Professional Web Site: http://TaxPanningStL.com