Business Tax Structure Question

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Nov 21, 2005 4:08 pm

Does anybody have any input on the practical advantages/disadvantages of a start-up business (not particularly securities) going in as an LLC versus an S-Corp?


I know LLC limits liability (doesn't take a brain surgeon) but I am more interested in TAX implications of each.  Any ideas?

Nov 21, 2005 4:18 pm

http://www.powerhomebiz.com/vol136/structure.htm


Nov 21, 2005 7:19 pm

One of the main differences is the number of people involved. An S-Corp would most likely need two to three people while an LLC can be done with just one.  Both allow pass through of profit and losses.


It kind of depends on what state you want to incorp in.  Here in CA there is a $800.00 min tax on either even if you have a loss on the business.


Check with your Sec of State to be sure.

Nov 21, 2005 10:09 pm

I didn't bother with the LLC.  An S-Corp can limit liability also.  I could not think of an advantage to bothering with the LLC, but would be interested in hearing a good rebuttal.

Nov 21, 2005 10:37 pm

An LLC is not a tax filing.  It is a legal filing.  An LLC gets taxed as a sole proprietor if one person.  It gets taxed as a partnership if 2 or more partners.

Nov 21, 2005 10:45 pm

A single person can establish an LLC taxed as an S-Corp.

Nov 21, 2005 11:57 pm
richardmlake:

One of the main differences is the number of people involved. An S-Corp would most likely need two to three people while an LLC can be done with just one.  Both allow pass through of profit and losses.


It kind of depends on what state you want to incorp in.  Here in CA there is a $800.00 min tax on either even if you have a loss on the business.


Check with your Sec of State to be sure.



I believe that you are incorrect, and that a single person can establish an S-Corp

Nov 22, 2005 7:06 am

Let me correct my post.  An LLC is not a tax filing.  It is a legal filing.  The owner of an LLC usually chooses to gets taxed as a sole proprietor if one person and taxed as a partnership if 2 or more partners.


Very rarely will you see an LLC that is not a sole propritor or partnership.