Coporation or LLC?

[gregdavidson]

I can't decide whether I want to incorporate my business or form an LLC? My business is small so I want to keep things simple. Which do you think is the best for a small business? I need liability protection for my new business which is why I don't want my business to be a sole proprietorship. Also, can I still run my business by myself if I go along with either one? Or do I need to sign other people up as investors or owners?

[RLorenzen]

First, I strongly recommend that you seek advice from an attorney. Keep in mind, I am not an attorney and this is not legal advice.

Which type of corporation are you considering? An LLC is sometimes preferred by small businesses. It gives them the protection of a corporation, and they are able to benefit from the tax advantage of pass through income (unless your LLC elects corporate tax status).

The basics are:
-Both an LLC and a corporation have limited liability. (There are exceptions to the limitations.)

-An LLC is only taxed on the personal level unless you elect corporate tax status. A corporation is taxed on the corporate level and on the personal level of the owners.

-An LLC does not have a shareholder body with a board of directors. A corporation does. The amount of shareholders depends on the type of corporation (S or C).

There are more differences. But those are some factors to consider when making your decision. Once again, I'm not an attorney.

[BusinessAdviser]

First, I strongly recommend that you seek advice from an attorney. Keep in mind, I am not an attorney and this is not legal advice.

Which type of corporation are you considering? An LLC is sometimes preferred by small businesses. It gives them the protection of a corporation, and they are able to benefit from the tax advantage of pass through income (unless your LLC elects corporate tax status).

The basics are:
-Both an LLC and a corporation have limited liability. (There are exceptions to the limitations.)

-An LLC is only taxed on the personal level unless you elect corporate tax status. A corporation is taxed on the corporate level and on the personal level of the owners.

-An LLC does not have a shareholder body with a board of directors. A corporation does. The amount of shareholders depends on the type of corporation (S or C).

There are more differences. But those are some factors to consider when making your decision. Once again, I'm not an attorney.

Richard,

No offense, but it's best not to advise others on things about which you really don't have much knowledge, aside from having read info on it in posts by other members here. There's so much BS that gets written here in either advising others or simply stating information that I take EVERYTHING with a grain of salt, assuming that if I repeat it as if it's coming from myself, I'm going to look like an idiot.

As an example, while owners of a corporation MIGHT realize double taxation, that's not always true. C Corps result in double taxation while S Corps, as pass-through entities, result only in personal taxation, just like LLCs.

Also, the type of corporation (C vs. S) does not determine the number of investors. While this MAY be the case, as in if you want to have a publicly-traded corporation with 10,000,000 shares issued, the fact that there are only, say, 10 shareholders (or "owners"), does not require that one Chapter of corporation be used over another.

Stick to what you know, especially if your source is other YE members. You'll end up coming across better, as well as being more helpful (or less harmful) to others.

[gregdavidson]

Richard,

No offense, but it's best not to advise others on things about which you really don't have much knowledge, aside from having read info on it in posts by other members here. There's so much BS that gets written here in either advising others or simply stating information that I take EVERYTHING with a grain of salt, assuming that if I repeat it as if it's coming from myself, I'm going to look like an idiot.

As an example, while owners of a corporation MIGHT realize double taxation, that's not always true. C Corps result in double taxation while S Corps, as pass-through entities, result only in personal taxation, just like LLCs.

Also, the type of corporation (C vs. S) does not determine the number of investors. While this MAY be the case, as in if you want to have a publicly-traded corporation with 10,000,000 shares issued, the fact that there are only, say, 10 shareholders (or "owners"), does not require that one Chapter of corporation be used over another.

Stick to what you know, especially if your source is other YE members. You'll end up coming across better, as well as being more helpful (or less harmful) to others.

So which do you think is best for a small business that wants liability protection? I'm leaning more toward an LLC but I'm a little uncertain due to my huge lack of knowledge. I want to run my business like I would a sole proprietorship to start off with without any investors or other owners. Didn't you also mention that an LLC has the same kind of taxation as a sole proprietorship?

[JLeezer]

Richard,

No offense, but it's best not to advise others on things about which you really don't have much knowledge, aside from having read info on it in posts by other members here. There's so much BS that gets written here in either advising others or simply stating information that I take EVERYTHING with a grain of salt, assuming that if I repeat it as if it's coming from myself, I'm going to look like an idiot.

As an example, while owners of a corporation MIGHT realize double taxation, that's not always true. C Corps result in double taxation while S Corps, as pass-through entities, result only in personal taxation, just like LLCs.

Also, the type of corporation (C vs. S) does not determine the number of investors. While this MAY be the case, as in if you want to have a publicly-traded corporation with 10,000,000 shares issued, the fact that there are only, say, 10 shareholders (or "owners"), does not require that one Chapter of corporation be used over another.

Stick to what you know, especially if your source is other YE members. You'll end up coming across better, as well as being more helpful (or less harmful) to others.

You're having quite a bad day today, aren't you? All of your responses to anything legal-related have been something to the gist of "you guys don't know diddly squat...go ask a professional". If the people asking these questions wanted to go ask a professional right this moment, they probably would have done just that instead of posting here. But they didn't do that. They came here to ask a question, get a little more educated, and then, hopefully, go seek further advice from a professional.

I guess what I'm trying to say is: BACK OFF! You're coming across as a condescending jerk. Richard fully warned that he isn't an attorney and the OP should take what he says with a grain of salt.

[JLeezer]

Also, the type of corporation (C vs. S) does not determine the number of investors. While this MAY be the case, as in if you want to have a publicly-traded corporation with 10,000,000 shares issued, the fact that there are only, say, 10 shareholders (or "owners"), does not require that one Chapter of corporation be used over another.

What Richard was getting at is that an S-Corp has limitations as to the number of shareholders allowed. A C-Corp does not. So, from the standpoint of someone looking at having 101 or more shareholders, this is a HUGE distinction.

[RLorenzen]

Richard,

No offense, but it's best not to advise others on things about which you really don't have much knowledge, aside from having read info on it in posts by other members here. There's so much BS that gets written here in either advising others or simply stating information that I take EVERYTHING with a grain of salt, assuming that if I repeat it as if it's coming from myself, I'm going to look like an idiot.

As an example, while owners of a corporation MIGHT realize double taxation, that's not always true. C Corps result in double taxation while S Corps, as pass-through entities, result only in personal taxation, just like LLCs.

Also, the type of corporation (C vs. S) does not determine the number of investors. While this MAY be the case, as in if you want to have a publicly-traded corporation with 10,000,000 shares issued, the fact that there are only, say, 10 shareholders (or "owners"), does not require that one Chapter of corporation be used over another.

Stick to what you know, especially if your source is other YE members. You'll end up coming across better, as well as being more helpful (or less harmful) to others.

Jonathen,
You must of skipped the top part. I am not an attorney. This is not legal advice. I believe you're in law school so that must be why you take all the advice relating to legal matters (that you construe to be legal advice when it isn't) so personally.

You wrote, "Also, the type of corporation (C vs. S) does not determine the number of investors." You may want to consult your textbooks because an S corporation is limited to 100 shareholders and that is precisely what I was referring to.

When I wrote that corporations were taxed twice and LLC's were taxed once I didn't say there weren't exceptions. I wasn't looking to write this guy a legal handbook on forming a company. I was simply giving a few basics. Every rule has an exception.

Overall, you come across as pretty foolish. Foolish in that you take this advice so seriously when it was not intended as legal advice. And foolish in that you feel you have to correct everybody in the legal threads to demonstrate what an intelligent individual you are.

[pboychuk]

I dont see why you wouldn't form an LLC unless you planned to go public. Correct me if im wrong.

[chrispalko]

I can't provide input on the specifics of each (mainly because I'm not a lawyer), but I'm going LLC in Jan. 09. It seems from the research I've done, my "small" business(es) will do fine with the protection of an LLC w/o the complications of a S/C corp. These corps do provide many benefits as well. Ultimately, you should speak with a business attorney and describe your needs, plans, etc. with them.

Then come back and let us know what you found out and your decision.

[BusinessAdviser]

You're having quite a bad day today, aren't you? All of your responses to anything legal-related have been something to the gist of "you guys don't know diddly squat...go ask a professional". If the people asking these questions wanted to go ask a professional right this moment, they probably would have done just that instead of posting here. But they didn't do that. They came here to ask a question, get a little more educated, and then, hopefully, go seek further advice from a professional.

I guess what I'm trying to say is: BACK OFF! You're coming across as a condescending jerk. Richard fully warned that he isn't an attorney and the OP should take what he says with a grain of salt.

For starters, it's bad for a forum to have bad advice given. Just because everyone says, "Take this at your own risk," doesn't mean it's a quality post. So why make a post when it's a BAD post?!

As for the "Go See a Professional" comment, having finished up at the Universitly of Missouri School of Law, I add comments when appropriate. Otherwise, no. Others should abide by the same appropriateness.

Back off?! I wouldn't be doing anyone a service by that, now would I?!

[BusinessAdviser]

What Richard was getting at is that an S-Corp has limitations as to the number of shareholders allowed. A C-Corp does not. So, from the standpoint of someone looking at having 101 or more shareholders, this is a HUGE distinction.

Please re-read the post.

[BusinessAdviser]

Jonathen,
You must of skipped the top part. I am not an attorney. This is not legal advice. I believe you're in law school so that must be why you take all the advice relating to legal matters (that you construe to be legal advice when it isn't) so personally.

You wrote, "Also, the type of corporation (C vs. S) does not determine the number of investors." You may want to consult your textbooks because an S corporation is limited to 100 shareholders and that is precisely what I was referring to.

When I wrote that corporations were taxed twice and LLC's were taxed once I didn't say there weren't exceptions. I wasn't looking to write this guy a legal handbook on forming a company. I was simply giving a few basics. Every rule has an exception.

Overall, you come across as pretty foolish. Foolish in that you take this advice so seriously when it was not intended as legal advice. And foolish in that you feel you have to correct everybody in the legal threads to demonstrate what an intelligent individual you are.

Richard, I've been to law school and provide factual information that is in every way correct. As for yourself? 16? No lawschool? Information not correct in every way? Look, I'm trying to help clean up this forum. Get over yourself if you don't like someone correcting you when you're wrong.

[BusinessAdviser]

I dont see why you wouldn't form an LLC unless you planned to go public. Correct me if im wrong.

Although it's never fair to make generalizations, if you're looking for liability protection, a small business owner is usually better with an LLC. Fewer ongoing requirements, easier to set up, usually cheaper, etc. For the three companies I run on the side of the wealth management and legal work, all LLC.

[BusinessAdviser]

So which do you think is best for a small business that wants liability protection? I'm leaning more toward an LLC but I'm a little uncertain due to my huge lack of knowledge. I want to run my business like I would a sole proprietorship to start off with without any investors or other owners. Didn't you also mention that an LLC has the same kind of taxation as a sole proprietorship?

To answer your question, and without knowing anymore, you'll probably be happier with an LLC.

[JLeezer]

As for the "Go See a Professional" comment, having finished up at the Universitly of Missouri School of Law, I add comments when appropriate. Otherwise, no. Others should abide by the same appropriateness.

Congrats! Did you happen to pass any of your courses? I went to school with plenty of folks that didn't know a darn thing more the day they graduated than they did the day they first started class.