I am starting a business and I want to get some feedback on the best route to take.

Scott,

Specifically what type of feedback are you looking for?  Do you need help with starting a business plan, financing, marketing, accounting, employee recruitment or something else?

 

How can we best help you to become more successful?  Most businesses should start with some business goals that are specific and a plan to help you get there. 

 

What resources have you utilized so far?

Susan Brooks

Mainly I've been going back and forth between the idea of forming a S-Corp or an LLC.  I've already started my business as a sole proprietor and we hit 1 year in November.  I've always heard that I need liability protection and that there are a lot of tax benefits to incorporating.  I just did my taxes and (especially now) need to figure out how to save some money this next year.  Any help would be appreciated.  Thanks.

Scott,

This is not my area.  I have people (Lisa Galoia) and she may be able to assist you with this question.  I have contacted her for you.

 

To your continued success.

Susan

Thanks Susan.

Hi Scott,

 

There are many things to consider when trying to decide which entity is right for you.  Both the LLC and Corporate structures offer protection of your personal assets from the business.  From a tax perspective, an LLC is taxed on a separate return (1065) and the business earnings are then transferred to your Personal 1040 via a K-1 (much like a w-2)  All earnings are then subject to self employment tax of 15.3% plus your regular federal withholding tax.  As an LLC you may not take a regular payroll check, but owner draws and you should make estimated tax payments quarterly based on your net income.  One exception to htis is a single member LLC - this is considered a disregarded entity by the IRS and you are treated like a sole prop from a tax persepctive (schedule C on your 1040).  

 

An S Corp is a good option as long as you have the cash flow available to pay yourself a "realistic" salary.  Once you have paid yourself a regular wage, then any additional profits can be taken as a disribution and are ordinary income on your 1040 instead of self employment income.  The benefit of this is that you contribute to your taxes all year long through paycheck withholding.  My opinion of a C Corp is not too high :)  There is big potential for double taxation with this structure.  Taxes are paid on the net income of the business at a corporate tax rate by the busines and then any remaiing profits of the business after taxes are then available for dividend distribution to owner and again, taxed on your personal return. 

 

I would be happy to discuss any of this further with you if you have additional questions.

 

Lisa

I see that I have mis-understood this site.  When it was explained to me it was to better your business and help in the process of getting out there.  I so mis-understood and wish to apologize to all for my ADVERTISEMENT. Wish I would of recieved an email before I did this.  Again I APOLOGIZE AND HOPE THE OWNER CAN DISMISS THIS ADD.  I do not wish to sell or buy.  I would give advice but it hard when you do not know what anyones business really is.  I hope sucess to all.  Dvora

Please no more negative emails, I get it.