Originally Posted by HAMPTON ROADS LAWN CARE
Thats funny that you say this but this is my 3rd business I have started and all S-Corps. But the big problem with an LLC is that you have to pay tax on ALL of your profits. I would rather pay tax on my NET not my Gross.
And to answer your question is that my 3 different accountants and my 2 different lawyers I have had they all have suggested S-corp due to the taxation and the covering of my personal assets.
I know an LLC covers your personal assets as well but an S-Corp is a better deal for taxation.......IMO!!!!!
i have no issues with the llc on taxation and outside of the 15% self employment tax on all my income for me in my state it works out cheaper then the 35% tax on the profit as a s or c corp.
as a llc i can lose a lot of my profits by giving myself a higher salary which is also a cheaper rate then the corporate tax.
last year we did about 575,000 so for me the 15% tax was cheaper in the end then the corporate rate.
as well as the same protections of the s or c corp i have the benifits of a sole proprietor and i don't have to have as stringent of a paper trail as a s corp and c corp.
plus it all varies from state to state and you also have to take into consideration that being there is a few year window in determining the survivabillity of a new business and the guys here that are asking about which is the better route to take as a new business owner the llc would and will be the best route to take in the event that their business does not pan out and they need to disolve.
do you think a new guy starting out is going to be able to afford and keep up with all the accountant expenses as well as the paper work involved in a corporation?
what about profits? in my state being a llc i am entitled to divy up the profits any way i wish and the 15% self employment taxes that i pay also goes towards my own personal social security and medicare contributions.
if i were a s corp my contributions to ss and medicare would only come from the portion i am given in my salary and all other income would be exempt and i would get absolutely no benefit from.
llc also require far less paper work and legal documentation then a s corp as well as a s corp with its profits issues stocks and shares certificates as well as must appoint a board and must keep minutes of all meetings and procedural decisions.
llc also has no ownership restrictions where as a s corp are only allowed up to 100 share holders and non of them can be other corporations.
so if you have 3 other businesses they can not own a stake in each other.
in the end they both have their advantages but to give advice to a everyday just starting out john Q landscaper it would be foolish to start out right from the gate as a s corp when he has no clue or any guarantee how his business will thrive and with the llc he can have the benefits and saftey net of the corp but can still manage his finances and when he does his taxes at the end of the year he can still do it in the same manner as he does now as a individual.
if you were starting out your business today and were limited in finances and were not in a position to give yourself a salary how would you use some of the money to pay your personal bills?
as a llc you can dip into the money anyway you wish and even though it still has to be accounted for there are no real major consequences in doing so.
as a s corp or c corp you can not just dip into the till as you wish.
i would assume if you started 3 businesses and still have all 3 that you are making good money, right? i know i am making boat loads of money and thats good two. but we can not look at it from our point of veiw, you have to look at it from the point of veiw of who is asking which to me sounds like someone in the early stages of a business and may not be making money and if they just want to jump into the world of being a corporation for protection purposes they should do so that gives them the most options based on their financial situation.
you can always make the change if you find yourself making so much money and you are getting swamped with taxes because when it comes to incorporating it is easier to work your way up then down.