Which structure is best for a small online pastry business, an LLC or S-Corp?
Get Legal Help Today
Compare Quotes From Top Companies and Save
Secured with SHA-256 Encryption
Which structure is best for a small online pastry business, an LLC or S-Corp?
I am having difficulties in picking the correct structure for my business. I will not have others working for me nor any partners. I need to know if registering WY as an LLC but filing as an S-corp to tax purposes better than just being a single member LLC for my new small pastry business. Which has a the best protection tax wise?
Asked on July 8, 2019 under Business Law, Georgia
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 5 years ago | Contributor
There is no difference for tax purposes between an S-corp and an LLC filing as an S-corp, partnership, or disregarded entity (different terms may be used): in both cases, there is no separate "corporate" taxes, but rather any profits (or losses, for tax deduction purposes) "pass through" the entity and drop directly to the owners tax return and so are only taxed once. You want to do this, rather than having "corporate" (e.g. c-corp) style taxation, where profits are taxed first at the entity level, then taxed again as income to the owner if and when he or she takes a distribution of them.
Similarly, there is no difference in liability protection: both LLCs and S-corps will insulate their owners from most (but not all; no protection is perfect) business-related debts or liabilities.
Therefore, there really is very little to choose from between S-corps and LLCs except that an LLC involves somewhat less paperwork and recordkeeping and formalities than an S-corp., making it somewhat the better choice.
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.