Should you open an LLC or a Corporation?!
The most common question we get asked daily is whether the customer should open an LLC or a Corporation.When it comes down to it you have thee options; an LLC, an S- Corp, or a C-Corp. The major difference between them is that an LLC and an S-Corp are pass through entities, which means the entity is not subject to income tax. Rather, the owners are directly taxed individually on the income, taking into account their share of the profits and losses. This avoids double taxation, where as a C-Corporation is taxed both on corporate taxes and the owner’s individual taxes. Generally, an S-Corp is more popular with smaller business because of the likely tax savings, and a C-Corp is more popular with larger companies because of the greater flexibility to raise capital. For an LLC take into consideration if you’d be an active or limited partner. An active partner that carries out day to day operations, is far more liable then a limited partner who is only risking his initial investment. An LLC is also required to be “published” which adds additional money to the sunken cost when opening one up.
Don’t fall for the hype you see online and try to open one yourself for “free”. The short answer is that there is no blanket statement, and its entirely situation based. Your attorney could be misinformed if they recommend one over the other. There are endless scenarios that could affect the best fit for your business such as which state you’re in, income sources, partners etc. which is why you should contact your tax professional to save yourself both time and money in the future.
Remember, it’s all in your hands. Schedule a consultation with a tax professional before you make any decisions or come visit us for one of the workshops we will be hosting at your new location.