S-Corp or LLC? Which do you prefer?

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MentalyDisturbd

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Before I speak to an accountant I was wondering which some of you prefer and your reasoning. LLC or S-corp?

Also, what happens if you get an S-Corp or LLC and expecting to continue to do well but, in 4-5 months your business falls apart? Can you just "quit" the S-Corp/LLC? Or how does that work?

I heard with S-Corps you have to assign yourself a salary which can be difficult for me since I can't really determine how much I'm going to make every week or month. Some months go well, sometimes they don't. I determine my cut depending on the income coming in each time I get paid. Each time I get paid I decide how much to take after taxes but, with an s-corp they want you to to determine a fixed salary? What about bonuses?

When I try to find an accountant what are some of the things I should ask them to determine, if they know what's best for my business? Some accountants I've spoken to, don't really know much about online marketing.

Also which has higher fees and taxes, LLC or S-corp? I don't have any additional partners, I'm just one individual.


Thanks
 


The tax consequences of each vary widely based on your personal situation. I've done both. I'm currently in both an LLC (real estate investing, no employees) and and S-Corp (consulting with employees).

The S-Corp is better for long term growth + employees. Go that way for sure if you plan on hiring people ever.

Beyond that - you really need to spend the time with a CPA to understand how it affects you. Either could be good depending on your situation.

In either case - if the business falls apart - you just need to file the final tax return for that year and the appropriate dissolution papers.
 
I'm not quite sure how it would be applicable to affiliate marketing, but for all of my business activities in general, I'm planning on creating an LLC in the state of Nevada. I'm doing this mainly because of their policies on regulations on taxes, which is favorable, since they have none on income and what not.
 
I have an S-Corp, which is kind of a hassle, but if you have a CPA and are making a good deal of money it's a pretty nice setup. I also enjoy the legal protection, but you have to be careful that if your a 100% shareholder in the company and your the only one doing anything, they can break through that corporate protection and come after you personally if they can prove your the only one participating. (This is what I've heard, don't hold me to that)
 
what about an international corporation? any caribean country you can think of?, where the tax rate is 3%, just like the British charged us, Stupid US we decided to get independent and decide to charge 33% on our people. Benjamin was full of shit.
 
I just set up an S-Corp on Thursday. I'm worried about all the bookkeeping I'll have to do, but it's going to save me thousands from the self-employment tax.
 
joshmv said:
I have an S-Corp, which is kind of a hassle, but if you have a CPA and are making a good deal of money it's a pretty nice setup. I also enjoy the legal protection, but you have to be careful that if your a 100% shareholder in the company and your the only one doing anything, they can break through that corporate protection and come after you personally if they can prove your the only one participating. (This is what I've heard, don't hold me to that)
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The liability protection from incorporating is not as great as many believe. First, the protection isn't there to protect officers of the corporation; it exists to enable people to buy shares in corporations without risking ruin.

ie, while the people who bought shares in Enron lost the purchase price of their shares, at least no one could go after them to seize their homes because they were part-owners of a giant fraud (which would in fact happen if Enron had been a partnership, for example.) There has never been a case where a court has found individual stockholders (without management power) liable for the debts/misdeeds of a large corporation.

But for smaller corporations, especially closely-held ones, "piercing the corporate veil" is becoming more common.

The real protection against liability comes from carrying a large personal insurance umbrella that covers you even if your corporation is pierced. That way you have an entity with "deep pockets" between you and the claimant.

Policies like that aren't necessarily cheap, however, and the insurer will research you carefully.
 
transistor said:
I just set up an S-Corp on Thursday. I'm worried about all the bookkeeping I'll have to do, but it's going to save me thousands from the self-employment tax.
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Nice!

The best thing I ever did was hire a CPA.

It took her literally an hour to help me setup my accounting software and now it makes everything extremely easy. Highly recommended.
 
Wicked_Guru said:
what about an international corporation? any caribean country you can think of?, where the tax rate is 3%, just like the British charged us, Stupid US we decided to get independent and decide to charge 33% on our people. Benjamin was full of shit.
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S- Corps can not be located on foreign soil. They also can not have foreign owners.

As far as the taxes - if you think you are going to get out of them you might want to buy some vaseline and combat lessons.
 
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