Entrepreneur choice LLC or Corporation

loanuniverseloanuniverse Posts: 1subscriber
Entrepreneurs based on the United States often get confused when it comes to deciding how to do business. Because of issues of liability, it is recommended that one does business under a business entity, but then comes the choice between an LLC and a Corporation. Coming from a business/banking background I might be able to give you some ideas as to which way you can go. Ultimately if you want tailored advice, you should pay a professional {attorney and accountant}, but in most cases that is not needed. To make your decision, you need to take the following into consideration: 1- Costs: Both corporations and LLCs are entities that are formed at the state level. This means that we have 50 different set of fees and taxes that apply to them. I would start by finding out what the fees are for organizing an LLC and for incorporating in your state. In my case, an LLC was significantly cheaper, and the annual fee was cheaper so that was a factor in my decision. You also need to find out about how your state taxes LLCs and Corporations, that could be different so you got to take it into account. 2- Are you going to be the only owner of the company? Did you know that a single member LLC can file federal taxes as an attachment to your own personal tax return? Another thing to consider as it might save you some money every year. 3- I am sure someone will say, well you need to be a corporation to go public. My answer would be if your business is large enough to go public, you are large enough to pay an attorney to create a corporation that swallows your LLC so that it can go public. 4-A corporation can be set up as a pass through entity for taxes {taxes paid by the individual owners} just like an LLC by choosing to be treated as a Subchapter-S Corp. There are some limitations about the maximum number of owners, but if you have that many owners {75 I believe} you can pay for attorney to give you advice and not ask in a forum. At the end of the day doing one or the other is a very simple process. Keep the articles of incorporation/organization simple and minimal specially if you do not have any other investors or partners, and good luck.
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