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LLC has several advantages over an S-Corp, these include ease of set-up, informality of operating agreements (e.g. less quarterly filing and reporting fullfulments than an S-Corp), and lower state taxes. the disadvantage here is that venture capitalists stay well away from LLC's and do not invest in them, as they are non dividend paying...
You can also convert to a S-Corp later down the road, advantages of the more complex tax restrictions are you can take a percentage of your profits as dividends... You can also create common stock and generate income this way.
thats the 5 second, easy version,
I am current operating my business as an llc, but am seriously considering making the leap to an S-Corp next year.
The real question is what type off assets are you looking to protect, an S-Corp has better asset protection, and properly administered you will pay lower amounts to uncle sam, however it is not for the faint at heart, its a lot of admin work...
Most real estate companies/construction companies use llc's as their choice of entity. Not exactly sure why but look up other real estate companies in your local area.
First I'd like to say, an LLC can be taxed as a Corp. LLC's and Corp.'s can provide you asset protection when set up properly and certain rules followed. I'm not sure if you are trying do decide your business structure or your tax structure. None the less, all of this is contingent upon several different factors like:
-what state do you reside in
I know that this doesn't answer your question, but there are a lot of things to think about before choosing a business structure.
Sorry I forgot to mention Im in california and will be doing business here also. My CPA said I could not 1099 those that do work for me unless they are licensed in their trade. I have a few guys working with me that are not licensed for their trade. I use them as needed for different tasks. I wouldnt consider them employees of mine. Which makes me wonder. I cant have every impercievable person that does some kind of work for me on my payroll. In my previous business I would 1099 everyone that did work for me but it wasnt incorporated. I am not looking to raise capital. I have one person which will be doing most of the big work with me. I didnt want to put him on payroll but if there is no other way around it ill do it.
Like I mentioned before. My main reason for inc'ing or LLC'ing is for asset protection more than anything else. I own 3 rentals which I own free and clear. Those are my main assets I would like to protect. I know about putting them each in their own individual LLC. I am looking to shield them as best I can from possible lawsuits from the business point of view. I have heard LLC's have dual limited liability protection, that is the reason that I am so interested in an LLC for my construction business too help as best I can for now until I do get around to placing them into their own LLC's.
I have heard stories where one can hire their own children. How would this benefit me? Sorry for this long post.
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Hey all looks like this is a good board, lots and lots of info. Im starting up a construction business and want to choose the best way of keeping from fattening up uncle sams wallet. Im having a hard time choosing between an LLC and a corporation. I have some ideas which ill talk about later but first I would like to see in which direction I will be steered by the board. I want to choose the entity with the better assett protection that is I would say my main concern but paying out more in taxes could dampen my desire regarding asset protection. What recommend you? Thanks in advance.....Robert