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LLC vs. S-Corp PLUS Section 179

DiverTravisDiverTravis subscriber Posts: 1
Greetings my new friends!   
First of all, I plan to open a small, TO-GO restaurant (~1000 sq. feet-will be leasing) and sell a limited menu selection. I will own 100% of the business (no partners or other investors, only myself) and have between 6 and 12 employees. I will not be using any financing as I will pay for the restaurant with 100% of my own personal money. 
Net Income should be between $45K - $85K each year after the first full year.
This small restaurant will cost under $100K for EVERYTHING.
The equipment shouldn`t be over $45K.
QUESTION 1: Should I form this business as a LLC or S-Corp and why?
QUESTION 2: I would like to use SECTION 179 to write-off all of the equipment I purchase this year. I want to do this because I will have over $80K in earned income from another job this year.
I want to offset this income in 2006 since I will not make this much next year in 2007. This makes the most sense and will save me A LOT in taxes if I can do a Section 179 this year. I have read that the equipment has to be "placed in service" in the year of the write-off ... even if it is the last day of the year. Can I do this with both a LLC and S-Corp and do I actually have to "USE" the equipment or simply purchase it and place it in my "soon to be open" store? My concern is that term "placed in service." Do I actually have to "use" the equipment this year to use the Section 179 or do I only have to purchase the equipment this year. I might not be officially open to the public before Dec. 31 of this year ... it might be the middle of January 2007 before I can be "open." The Section 179 would work great this year since I will still have a Net Profit/Income "overall" even after the Section 179.
Thanks again for your help and advice. I look forward to hearing from EVERYONE! 
Travis C.


  • NuevolutionNuevolution subscriber Posts: 30 Bronze Level Member
    Travis, Good question... Here it is.... An LLC, its a limited liability Corporation, and the S Corp is a Corporation... Your best bet is go with a C Corp and claim your taxes as a Sub-Chapter S.. meaning all the expenses or earning will be past down to you on your taxes at the end of the year. Now as for Section 179, being in place means you don`t have to use it to claim it... Form 179 is start up business cost write up... so no matter wheather you used it or not, it`s still a start up expense, but remember you can`t deduct the whole thing in 1 year. I believe the total amount of time you have to deduct it is 60 months. or 5 years. Whether you use it this year or next what difference does it make? it`s still a business expense so you should be fine.. There`s a book out there by NOLO called "Deduct it"... you should get yourself a copy because it explains to you what you can deduct and what to be careful with. It basically talks about form 179.... Check it out...You`d be amazed at what you can deduct...
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