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Options
S-Corp or LLC
Stoshu
subscriber Posts: 3
Hi All,
I would appreciate advice in deciding between an S-Corp and an LLC. In short it seems as though an LLC offers the flexibility in ownership changes and profit distribution but I`m struggling with weather or not those benefits are greater than the tax advantages that an S-Corp offers.
My business will be a Manufacturers` Rep Firm in which we`ll have contracts with several different manufacturers to sell their product lines to retail. At the moment we`ll solely be focusing on internet retailers as a niche.
-The business will have 4 partners (Me, my wife, and two others). I`m under the impression that changing ownership is more flexible with an LLC and since anything can happen with the other two partners down the road, I think it`s an important factor.
-Each of the 4 partners will also act as the company`s sales force. A partner (acting as a rep when establishing a new retail account) will be paid the lion`s share of commissions for all sales made through that retail account.
-The business makes $$ be receiving a commission from the manufacturers for all sales.
-The "back office" of the company is located in PA but we`ll be doing business with manufacturers and retailers nation-wide.
-I will handle the back office alone as the other two partners are located in NV and CA and have another business of their own. I will be compensated somehow for this responsibility and have not decided weather the company will pay me a salary or if I will take a small % off the top of gross sales or commissions.
-The remaining revenue from commissions will be distributed to the rep and to the company.
-Annual dividends from the business will be distributed to the partners with a portion staying in the business. The exact distribution will mostly likely be equal between the partners but that could change.
Please let me know in your responses if there is any other relevant information that you need to form an educated response. As I stated, it seems like the flexibility of an LLC would be right for me (my accountant emphatically agrees) but I`m concerned that the tax benefits of an S-Corp might outweigh the flexibility of the LLC. We could easily establish ownership proportions up front to account for the additional compensation I`ll be receiving as manager of the back office in order to comply with an S-Corp`s compensation restrictions if we so chose.
Please offer whatever advice anyone has. Thanks so much!!!
I would appreciate advice in deciding between an S-Corp and an LLC. In short it seems as though an LLC offers the flexibility in ownership changes and profit distribution but I`m struggling with weather or not those benefits are greater than the tax advantages that an S-Corp offers.
My business will be a Manufacturers` Rep Firm in which we`ll have contracts with several different manufacturers to sell their product lines to retail. At the moment we`ll solely be focusing on internet retailers as a niche.
-The business will have 4 partners (Me, my wife, and two others). I`m under the impression that changing ownership is more flexible with an LLC and since anything can happen with the other two partners down the road, I think it`s an important factor.
-Each of the 4 partners will also act as the company`s sales force. A partner (acting as a rep when establishing a new retail account) will be paid the lion`s share of commissions for all sales made through that retail account.
-The business makes $$ be receiving a commission from the manufacturers for all sales.
-The "back office" of the company is located in PA but we`ll be doing business with manufacturers and retailers nation-wide.
-I will handle the back office alone as the other two partners are located in NV and CA and have another business of their own. I will be compensated somehow for this responsibility and have not decided weather the company will pay me a salary or if I will take a small % off the top of gross sales or commissions.
-The remaining revenue from commissions will be distributed to the rep and to the company.
-Annual dividends from the business will be distributed to the partners with a portion staying in the business. The exact distribution will mostly likely be equal between the partners but that could change.
Please let me know in your responses if there is any other relevant information that you need to form an educated response. As I stated, it seems like the flexibility of an LLC would be right for me (my accountant emphatically agrees) but I`m concerned that the tax benefits of an S-Corp might outweigh the flexibility of the LLC. We could easily establish ownership proportions up front to account for the additional compensation I`ll be receiving as manager of the back office in order to comply with an S-Corp`s compensation restrictions if we so chose.
Please offer whatever advice anyone has. Thanks so much!!!
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