Why would I want an S-Corp Vs an LLC taxed as an S-Corp?

Why would I want to have an S-Corp if I can have an LLC taxed as an S-corp? The LLC is much easier and I am having trouble determining the difference.

Thanks for any insight.

 

If you are the only employee on the books, you can't be taxed as an S-corp, you will be taxed as if you were a sole prop., therefor paying an extra 15.3% for self employment taxes. You didn't state how many/if employees, so just making sure you know this.

If you do meet the requirements for an LLC taxed as an S-corp, then everything is the same as an S-corp, plus the benefits of an LLC. You will most definitely need to have a professional prepare your taxes though, whereas if you did a straight S-corp, the taxes are a little less confusing and you could probably do them yourself.

 

ATM, all the work that is done for me is freelance per project basis, not on a salary. So I'm assuming I would need to setup a straight S-Corp.

I'm going to be talking to my lawyer so I just want to seem as prepared as possible. I appreciate your input AFitch! +Rep.

Any other comments are welcomed/appreciated.

 

When you first start a Corp, it will be a C-Corp then you'll submit the paperwork to get it converted to an S-Corp. You'll want to convert it right away, or you'll be taxed as a C-Corp for the period in between. Good luck.

 

What most people don't know is that an LLC is not a tax entity. It is for liability protection. When you form an LLC you choose how you would like to be taxed. You can do nothing and be taxed as a sole proprietor, or you can form a corporation, either C or S. In some cased you can be taxed as a partnership. (Although you would probably form an LLP for that).

The reasons LLC's came about was so that people could get the liability protection of a corporation without all the paperwork. (Board meetings, minutes, annual shareholder meetings, etc.)

The S Corporation is for tax savings, but make sure you consult with a good tax adviser (not a lawyer) so you know the right way to claim all your deductions.

 

Thanks for the advice KMP!

 

You may not want to spend the money to see a tax advisor, but in my experience it is really worth it. Just hire someone to do your taxes and have him give you advice for free while you sit and talk to him

Also, you can just go to your local library (or search for some sites online) for a basic business book that can explain the basics. Just make sure the book is recent as tax laws change frequently. You will want to know how much taxes you will have to pay for an LLC and S-Corp depending on your specific business arrangement.

Neither an S-Corp nor an LLC is better in all situations, but depending on your specific business structure, e.g., number of employees, how much you are making, what tax bracket you fall under, what expenses you have, etc., one may be better than the other.

Not in all states AFlitch...

 

I think people go for the S-corp option if they plan on transfering ownership to their children, Its a lot easy as an S-corp than as an LLC, also an s-corp is better than an LLC, if there is a need to raise capital through selling stock