College start-up

**ericville** · 03-16-2009 10:10 PM

I recently filed my initial articles of incorporation with my secretary of state's office. The issue I am stuck on is which type of tax designation to start out with.

I am currently in college and for the last few years I have had very little tax paid. I expect my startup to churn a profit within 2 years.

I noticed online that the S corporation was recommended for start-ups not experiencing profits immediately. The only issue was my personal taxes have been zero.

Should I stick with a C corporation to keep the losses with the business?

**bking** · 03-17-2009 03:29 PM

Well, as I understand it, you have to file as an S-corp with your secretary of state to get the benefits. If you've already filed as a c-corp, you may be able to file amended articles, but you'll need to check with an attorney in Ohio. I'd be curious to know why you went with a corporation in the first place instead of an LLC, assuming you are the only (or one of very few) members.

**mcstartup** · 04-22-2009 10:27 AM

You probably want to go with an LLC. The most common reasons for going with a C-Corp (as a startup) is because you are going to bring on investors (and thus want multiple classes of stock), or to do stock options and things which can be cumbersome under an LLC.

Now, you *can* do the C-Corp thing if you really think the losses it will accumulate will be substantial relative to the future earnings. In that case, it could be a benefit. However, based on your background of having low/zero taxes now and being in college, I'm guessing you aren't shelling out big money to get this new business going. When the profits do come in they will probably quickly dwarf any losses to-date. If that's the case, it's not going to be worth all the screwing around with annual filings and such for the C-Corp.