LLC vs S Corp

[Yungerman]

Dear business owners and entrepreneurs,

Did you incorporate as a LLC or S Corp? Please explain why A and not B. Please specify in which state the company was incorporated. 

[Centurion]

speak to your tax adviser
except for the $9 in new york
LLC is better not personally liable

[notanonymous]

speak to your tax adviser
except for the $9 in new york
LLC is better not personally liable

Ich bin nisht a lawyer, uber...you are NOT 'personally' liable as either a LLC or S corp.  The main difference is by filing taxes.  S Corp would need to file a corporate tax return, while LLC can go on a schedule C.

[notanonymous]

To add...you can take a 'distribution' (which is exempt from FICA) with a S-Corp election.  You can not do that with an LLC (which is simply a corporate formation, nothing to do with taxes).  CMIIW

[churnbabychurn]

A main advantage of a corporation is that it is easy to sell or add partners.
For tax a s corp functions basically the same as an llc. But distribution's from an s corp other than salary are subject to income tax but not FICA

[Menachem613]

I always rely on anonymous posters on the internet for legal and tax advice.

[DovtheBear]

I always rely on anonymous posters on the internet for legal and tax advice.

Then you've come to the right place.
Welcome.

[churnbabychurn]

I always rely on anonymous posters on the internet for legal and tax advice.

you get what you pay for.

[notanonymous]

A main advantage of a corporation is that it is easy to sell or add partners.
For tax a s corp functions basically the same as an llc. But distribution's from an s corp other than salary are subject to income tax but not FICA

The tax is not the same for LLC and S-Corp.  An S-corp files an 1120S, an LLC would file with the 1040, schedule C.  An LLC is filed (legal papers) with the state, an S-Corp is done through the IRS (after filing legal papers with the state).

[notanonymous]

I always rely on anonymous posters on the internet for legal and tax advice.

I am NOTanonymous.

[JunkYardUnz]

There are big big differences, based on what you are doing one might be better than the other. For example like one poster mentioned for an s-corp you are going to need to file a federal and state tax return besides for tax pref fees and there is $300 min tax in NJ. On the other hand a LLC can be a SMLLC and be part of your personal tax return on Sch C or E. If you buying and selling Real Estate you don't put it in a s-corp. Then again if you are a s-corp then you can shelter some of the income from 15% FICA.... Again there are tons of differences you should really speak to an accountant first.

[churnbabychurn]

The tax is not the same for LLC and S-Corp.  An S-corp files an 1120S, an LLC would file with the 1040, schedule C.  An LLC is filed (legal papers) with the state, an S-Corp is done through the IRS (after filing legal papers with the state).

the tax is the same in as much that with both the income flows through to the owners. unlike a C corp which pays its own taxes.

[HowYaDoin]

I always rely on anonymous posters on the internet for legal and tax advice.

+1

[notanonymous]

the tax is the same in as much that with both the income flows through to the owners.

I realized after I posted what you meant, but got distracted and did not change my post.  You are right, the difference is how it is filed with the IRS, but either way it flows to the owner (as opposed to a C-Corp).

[Am]

It is possible to request S Corp status for your LLC. You'll have to make a special election with the IRS to have the LLC taxed as an S corp using Form 2553.

[Am]

S corps are very not practical for small businesses. Stricter Operational Processes. S corps require scheduled director and shareholder meetings, minutes from those meetings, adoption and updates to by-laws, stock transfers and records maintenance.

[notanonymous]

It is possible to request S Corp status for your LLC. You'll have to make a special election with the IRS to have the LLC taxed as an S corp using Form 2553.

Form 2553 is the IRS form to BECOME a S-Corp.  That is what I was saying.  As far as the IRS is concerned, there is no such thing as an "LLC" for filing purposes.

[notanonymous]

S corps are very not practical for small businesses. Stricter Operational Processes. S corps require scheduled director and shareholder meetings, minutes from those meetings, adoption and updates to by-laws, stock transfers and records maintenance.

Although you are correct, they can be done in a very minimal way.  Although, if only for liability purposes, then it is unnecessary.

[ari101]

you get what you pay for.

not at dansdeals

[Bostener]

Its amazing to see how much wrong advice some folks post here.