6 ms·

What isn't mentioned here is that an LLC is relatively straightforward to set up, an average Hacker News reader could set one up in their state with a few hundr

What isn't mentioned here is that an LLC is relatively straightforward to set up, an average Hacker News reader could set one up in their state with a few hundred dollars and no lawyer. S-Corps are more complicated (you will need a lawyer), and C-Corps are VERY complicated (you will want at least 2 lawyers). The amount of legal fees and time spent creating the different corporations varies immensely. It's not as simple a comparison as just "tax code". If you are not sure what kind of corporation you want to set up, I highly recommend you spend a few hundred dollars and consult a lawyer for advice. The internet is a terrible place for legal advice. Source: I own an LLC, and consulted a lawyer about C-Corps and S-Corps.

georgemcbay 14y ago
"What isn't mentioned here is that an LLC is relatively straightforward to set up, an average Hacker News reader could set one up in their state with a few hundred dollars and no lawyer." This is true but it should also be noted that in some states you can get taxed a significant amount of money per year on your LLC. California, in particular, has an $800 minimum tax per year on LLCs, regardless of whether you've earned a single dime. $800 a year isn't much if your LLC is an actual money making venture, but is pretty significant if you are just using it for what amount to basically side projects.
- deleted 14y ago
  [deleted]
- ericabiz 14y ago
  California's $800 minimum corporate tax also applies to S-corps and C-corps. Also, to correct a common misconception I often hear (not in your particular post, but in general when I talk about this), registering your corporation in another state does not exempt you from the minimum tax. If you, the corporation's officer(s), live in California, you must register with the state of CA as a foreign corporation (foreign in this instance meaning out-of-state), and pay the $800 minimum tax. Do not try to get around this--California will hunt you down.
jforman 14y ago
An LLC may be easy to set up, but maintaining the personal liability shield is non-trivial. I'd recommend getting advice from a lawyer no matter the route taken.
- tptacek 14y ago
  What do you mean by this?
- markkanof 14y ago
  Please expand on this. It's quite a bold statement to make without giving at least basic details about what non-trivial issues you are referring to.
  - will_brown 14y ago
    With liability protection you want two forms of protection. The Founder(s) needs to be personally protected from the company liabilities, and you want to company to remain protected from the liabilities of the Founder(s). For example if you form a "single member" LLC, or a LLC with 1 owner, because LLCs are partnerships Court's will not protect the LLC from the single Owner's liabilities because there are no partners to justify protecting the business. So if the Owner has debts, the creditors can go after the the LLC as a asset to cover the debt. So while anyone can set up an LLC easily on their own, as in this hypothetical it would have been worth the money to talk to an attorney before forming and have the lawyer advise to and another second owner and receive protection with the LLC or form a corporation instead of an LLC as a single owner.
    - Fundlab 14y ago
      Wyoming offers a lucrative incorporation package, you dont even have to live there. http://wyomingcompany.com/wyoming-corporations/ http://wyomingcompany.com/wyoming-corporations/
    - count 14y ago
      'because LLCs are partnerships' huh? Single Owner LLCs exist specifically to protect the personal assets of a owner from the creditors of the LLC, IFF the LLC was the signatory on the debt, rather than the owner (if you have to provide an SSN to secure the debt, it's probably in your name personally, rather than in the companies name). Courts will protect the owner, as long as the owner keeps their personal finances and the company finances (and activities) entirely separate - pay a salary to another account, etc. If there's any mixing, you get screwed. C-Corp/S-Corp doesn't change any of that at all from a single-owner perspective though...
molsongolden 14y ago
You can elect for your LLC to be taxed as an S-corp for free. Just a few forms to file with the IRS. There are many considerations so talking to a professional is always a good idea but remember: LLC = Lawyer's Likely Choice

georgemcbay 14y ago

"What isn't mentioned here is that an LLC is relatively straightforward to set up, an average Hacker News reader could set one up in their state with a few hundred dollars and no lawyer." This is true but it should also be noted that in some states you can get taxed a significant amount of money per year on your LLC. California, in particular, has an $800 minimum tax per year on LLCs, regardless of whether you've earned a single dime. $800 a year isn't much if your LLC is an actual money making venture, but is pretty significant if you are just using it for what amount to basically side projects.

deleted 14y ago
[deleted]
ericabiz 14y ago
California's $800 minimum corporate tax also applies to S-corps and C-corps. Also, to correct a common misconception I often hear (not in your particular post, but in general when I talk about this), registering your corporation in another state does not exempt you from the minimum tax. If you, the corporation's officer(s), live in California, you must register with the state of CA as a foreign corporation (foreign in this instance meaning out-of-state), and pay the $800 minimum tax. Do not try to get around this--California will hunt you down.

jforman 14y ago

An LLC may be easy to set up, but maintaining the personal liability shield is non-trivial. I'd recommend getting advice from a lawyer no matter the route taken.

tptacek 14y ago
What do you mean by this?
markkanof 14y ago
Please expand on this. It's quite a bold statement to make without giving at least basic details about what non-trivial issues you are referring to.
- will_brown 14y ago
  With liability protection you want two forms of protection. The Founder(s) needs to be personally protected from the company liabilities, and you want to company to remain protected from the liabilities of the Founder(s). For example if you form a "single member" LLC, or a LLC with 1 owner, because LLCs are partnerships Court's will not protect the LLC from the single Owner's liabilities because there are no partners to justify protecting the business. So if the Owner has debts, the creditors can go after the the LLC as a asset to cover the debt. So while anyone can set up an LLC easily on their own, as in this hypothetical it would have been worth the money to talk to an attorney before forming and have the lawyer advise to and another second owner and receive protection with the LLC or form a corporation instead of an LLC as a single owner.
  - Fundlab 14y ago
    Wyoming offers a lucrative incorporation package, you dont even have to live there. http://wyomingcompany.com/wyoming-corporations/ http://wyomingcompany.com/wyoming-corporations/
  - count 14y ago
    'because LLCs are partnerships' huh? Single Owner LLCs exist specifically to protect the personal assets of a owner from the creditors of the LLC, IFF the LLC was the signatory on the debt, rather than the owner (if you have to provide an SSN to secure the debt, it's probably in your name personally, rather than in the companies name). Courts will protect the owner, as long as the owner keeps their personal finances and the company finances (and activities) entirely separate - pay a salary to another account, etc. If there's any mixing, you get screwed. C-Corp/S-Corp doesn't change any of that at all from a single-owner perspective though...

molsongolden 14y ago

You can elect for your LLC to be taxed as an S-corp for free. Just a few forms to file with the IRS. There are many considerations so talking to a professional is always a good idea but remember: LLC = Lawyer's Likely Choice