Which form of business structure should I use?
Get Legal Help Today
Compare Quotes From Top Companies and Save
Secured with SHA-256 Encryption
Which form of business structure should I use?
I am starting an online store owned by currently just myself. Eventually I may
have an additional owner or 2, but it is currently just myself. What type of
structure should I chose either LLC or S Corp.
Asked on November 14, 2017 under Business Law, Texas
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 7 years ago | Contributor
There is very little to choose between among an S-corp. and an LLC.
1) Both provide the same liability protection to the owner(s) personally as against most business debts, liability, and obligations.
2) Both give you the same "pass through" (no double taxation) tax treatment (select "partnership," "disregarded," or "pass through"--terms may vary--treatment when you set up the LLC.
3) The LLC involves less paperwork and reporting formalities than an S-corp.: no need for annual "meetings," for example. That is one advantage.
4) If you bring in other people later, an LLC gives you more flexibility about assigning economic interests vs. power or control: those two things are more closely linked in S-corps, so that power generally equals ownership. With an LLC, you can mix and match more.
So an LLC is probably slightly better, but it is not a large difference.
IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although AttorneyPages.com has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.