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S corps are generally preferable to LLCs if you are eligible to form one, but it also depends on your goals, i.e. if you intend to raise money, you need an LLC
by gamblor956 6y ago
S corps are generally preferable to LLCs if you are eligible to form one, but it also depends on your goals, i.e. if you intend to raise money, you need an LLC or C Corp.
I formed an S corp for my personal protects for tax reasons. I also used legalzoom, because it's good enough for most small businesses. (And even big ones; Panda Express is an S corp.)
- shrimpx 6y agoJust curious, what are some of the tax benefits you gain with an s corp?
- siberianbear 6y agoI also don't understand the parent's comment. An LLC can make a tax election with the IRS to be taxed as an S-Corp.
- jccooper 6y agoChapter S election (which an LLC can do, by the way, it's not a particular type of entity) does pass through taxing, and has a thing where the "profit distribution" of the corp, after paying shareholders "a reasonable salary", can be distributed without self-employment taxes, just regular income taxes. So you can save some 15% on some portion of your income--if you have an income larger than whatever you may be able to justify to the IRS as a reasonable salary. Other options may make sense based on how much money is kept in the company, if you have passive investors, how much money you're making, how much work the shareholders do, etc.