[eeloha]

I have read a bunch of comparisons online between the 2 businesses, but still cant find anything in plain and simple english that works for me. I want something easy to operate and save a bunch of money on taxes by writing everything from gas to cell phone bills off. Any opinions?

[jasaunders]

What you're proposing sounds illegal if it isn't for a legitimate business.

If that is all you're using your business entity for, it really won't matter. When you start raising money and talking about capital structure and legal requirements/regulations for an s corp vs. an llc, then there are major differences. It will also depend on your state.

[ADVERTISE HERE!]

An LLC is likely what you're looking for. It is generally simpler and less expensive to start and run, provides limited liability, and offers the same tax advantages as an S Corp. As for writing things off, if it's an ordinary and necessary business expense, it's deductible whether your operating as an LLC, S Corp, or any other business entity.

[jasaunders]

Originally Posted by ADVERTISE HERE!

An LLC is likely what you're looking for. It is generally simpler and less expensive to start and run, provides limited liability, and offers the same tax advantages as an S Corp. As for writing things off, if it's an ordinary and necessary business expense, it's deductible whether your operating as an LLC, S Corp, or any other business entity.

I would add that you will want to check your specific state, in some states its cheaper for an S Corp. Here in Illinois it is $150 for an S Corp compared to $500 for an LLC.

[JLeezer]

Originally Posted by jasaunders

I would add that you will want to check your specific state, in some states its cheaper for an S Corp. Here in Illinois it is $150 for an S Corp compared to $500 for an LLC.

Same here in TN. It is substantially less expensive to form a corporation as opposed to an LLC.

[ADVERTISE HERE!]

However, guys, there are more costs than just entity creation costs. I would argue an LLC is still less expensive over time.

[jasaunders]

Originally Posted by ADVERTISE HERE!

However, guys, there are more costs than just entity creation costs. I would argue an LLC is still less expensive over time.

Could be. Depends on state requirements.

In Illinois there are very few requirements for S Corps. No need to submit annual meeting minutes or really do anything. You have to maintain records, but no submission requirements. In Illinois, I believe it is much more affordable to go with an S Corp. But in many if not most other states, you would be better off with an LLC.

[eeloha]

Originally Posted by jasaunders

What you're proposing sounds illegal if it isn't for a legitimate business.

If that is all you're using your business entity for, it really won't matter. When you start raising money and talking about capital structure and legal requirements/regulations for an s corp vs. an llc, then there are major differences. It will also depend on your state.

no no, its nothing illegal. the whole point is so i can save money on taxes. i guess what im trying to do it take the money i make at work and put it into my business as income so i can deduct gas, food, etc. I dont even know if thats smart or possible. eventually i would like to start an online business, but thats in a while. In my state of OH, llc costs the same as S corp to file so thats not an issue. You guys are making me lean more toward an llc though.

[JLeezer]

Originally Posted by eeloha

no no, its nothing illegal. the whole point is so i can save money on taxes. i guess what im trying to do it take the money i make at work and put it into my business as income so i can deduct gas, food, etc. I dont even know if thats smart or possible. eventually i would like to start an online business, but thats in a while. In my state of OH, llc costs the same as S corp to file so thats not an issue. You guys are making me lean more toward an llc though.

I'm presuming that by 'money i make at work' you mean money that is earned from your employer, not a business that you own. If that is the case, you can probably make an investment into your own business with the money you make from work, but your company will have to do actual business that generates revenue and eventually a profit. If it never does this, the IRS will be all over you and will change your classification from a business to a hobby, making you liable for all of the taxes you thought you were saving, plus interest and penalties.

Basically, you can save on taxes while running a business if done properly. You can't save on taxes just by having a business entity registered with your state. A business and an entity are two different things. An entity is just a legal structure that is able to hold the operations of a business.

Hope that helps some.

[Charles of 5DPI]

Originally Posted by eeloha

no no, its nothing illegal. the whole point is so i can save money on taxes. i guess what im trying to do it take the money i make at work and put it into my business as income so i can deduct gas, food, etc. I dont even know if thats smart or possible. eventually i would like to start an online business, but thats in a while. In my state of OH, llc costs the same as S corp to file so thats not an issue. You guys are making me lean more toward an llc though.

Hm, you described something very closely to laundering money.

Not sure about your employer, but they probably charge your taxes already and/or claim it against the government. You are a tax right off for the company, so they will claim you.

That being said, I don't think you'll get ahead by dumping your income into a business entity and then spending it that way. The money is going through two layers. Your employer and then your business, which are both being taxed.

Theoretically, I would say you are making matters worse?

You would need to speak to a CPA to confirm this.

[nocci01]

Don't form a business entity unless you know what the purpose is other than tax advantages. I'm not an attorney or CPA...and this advice was from seminars, books and paying for legal counsel when I started my business entities.

It just depends!

If you're holding real estate, many people prefer the use LLCs or LPs instead of the Corporation or S Corporation. If you hold real property under a corporation, you can still be sued as an individual for shares that you personally own...that may have a negative impact on your real estate owned. It is legal to write off business expenses that you speak of when you become incorporated (includes the formation of an LLC and/or LP); however, you may want to seek advice from a CPA or directly from the IRS.

The C Corporation has certain tax advatages and disadvantages vs. the S Corporation. The C Corp can write off fringe benefits but has double taxation. The S Corp is a pass through entity meaning you won't have the double taxation like the C Corp (pay taxes once or twice). That's why it just all depends on what type of business you are building and exactly what benefits you are seeking more of. Pay the price to learn about the proper entity that suits you and what you're attempting to accomplish.

Just make sure you do it the right way. If you don't have proper documentation and follow the rules and regulations, you can still get in trouble with the IRS and/or others (lawsuits). Corporations require minutes (record book, minute book, black book, etc.) and documentation of the entity's operations including an annual meeting of the shareholders and board of directors. Call up some attorneys or companies that file entities and ask them for advice. It's not hard. Just research thoroughly so you don't cause any problems in the future.