ForumsHome

Earnings from an LLC can be disbursed to partners on whatever basis the Operating Agreement dictates. Money from an "S" corp is disbursed in proportion to each owners contributions (ownership).

That being said, you can always pay different salaries.

If you do elect to be an LLC, be aware that is a corporate structure not technically recognized by the IRS and they will automatically classify you as another type on entity for taxing purposes (I Believe a partnership in this case). If you choose an LLC structure, be sure to file the necessary forms with the IRS to be taxed as an "S" corp:

Form 8832 Entity classification (to be classified as a corporation)
Form 2553 Election by a Small Business Corporation (To be taxed as an S corp)

This will allow for pass through income.

Choosing an LLC has some small tax advantages regarding distributions and payroll taxes but there is a little extra paperwork involved up front.

You should talk to some local accountants and ask for their opinion based on your specific situation. Additionally, with a partner, you'll want an attorney to draw up your corporate documents (Operating Agreement or Shareholder Agreement) depending on the structure you decide on.

Remember, with a partner you are entering a "marriage" and everything looks good now but you need your "prenup" in place in case you need to dissolve the arrangement down the road.

Good Luck!