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LLC or Corporation....what do you guys have?

by BJ Min
38 replies
hi,

i used to have a LLC company for my internet business...did it through legalzoom...

anyways...i talked to my CPA and he told me that i should get a S Corporation because it will save me up in taxes...so i am in the process of making a corporation now...

i do internet marketing selling digital products like most of you guys...

just wondering...what do you guys have...LLC or Corporation?


thanks
BJ
#corporationwhat #guys #llc
  • Profile picture of the author Ross Vegas
    LLC out of Nevada

    and about to be partner in an Ltd in UK

    Taxes will be nutty next year.

    I didn't study much in tax class so I wouldn't know what's better.

    However, if your CPA can save you above and beyond their cost, plus cost of re-forming then go for it.
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  • Profile picture of the author NewLevelMarketing
    I personally have a corporation. It's a C corp, I believe. I'll have to look into S corps now that you mentioned it!
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  • Profile picture of the author macfan182
    COPORATION.. SOUNDS COOLER
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  • Profile picture of the author Tim Fuhrman
    I've had an LLC for 9 years and just this year when I was complaining about taxes to my accountant he tells me I should have an S Corp. So now I have to look at that. I think the LLC is easier to set up and maybe cheaper initially but the taxes start to get you even if you're not making a lot of money. There are pros and cons to each so find someone you trust and stick with their recommendations.
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  • Profile picture of the author BJ Min
    what's the benefit of the nevada corp?
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  • Profile picture of the author KhadijahChapman
    Personally I believe that llc's are always the best to go, because of the tax benefits as well as not having to be doubled taxed, as you are when you have a corporation. S Corporations are good when you have employees - however as an llc, I tend to hire more IC- independent contractors and let them worry about their own taxes, however that is my way, I am not saying its the best, however I never have to worry about corp taxes that you have to pay yearly, just because you have a corporation.
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  • Profile picture of the author Jesus Perez
    LLC being taxed as Scorp is what I'm using. Taxed as SCorp without the legal drama of minutes, etc.

    There's a really good thread in the War Room about this.

    Found it: http://www.warriorforum.com/war-room...tructions.html
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  • Profile picture of the author dorim
    I am an S corporation, I incorporated myself and saved a lot of fees doing it on my own.
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    • Profile picture of the author sundrop881
      Where did you go to get the process to incorporate yourself? Thanks!
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      • Profile picture of the author T.R. McCarroll
        Reminder ... if you elect to form a corp in Delaware or Nevada for tax purposes and you don't live and conduct business in those states you are now considered a "foreign corporation".

        Which mean usually the state you live and/or conduct business in requires you to register and also pay certain fees in addition to the fees you pay to register in Delaware and/or Nevada.

        In Fla a S Corp cost less than $100.00 and can be done completely online
        including all documents and payment. Other states will vary of course, but if you
        know what you want then go to the local state government website and file directly.
        You by-pass the middle man which can charge you for a simple S-Corp $99.00 plus
        fees.

        Anybody wish to validate the "foreign corp" statement above?

        Thanks

        Thom
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        • Profile picture of the author Mo Goulet
          Originally Posted by T.R. McCarroll View Post

          Reminder ... if you elect to form a corp in Delaware or Nevada for tax purposes and you don't live and conduct business in those states you are now considered a "foreign corporation".

          Anybody wish to validate the "foreign corp" statement above?

          Thanks

          Thom
          I have an street address with a suite # (Box) in Las Vegas and a Las Vegas Phone # (Skype) and an LLC for Las Vegas which of course distributes the income to the members each year and has no tax liability but since I have an address and local number, I can register and do business in Las Vegas and not pay state tax. When you figure the licenses of about $300 a year plus the Skype # $36 a year and the box address (street address with a suite #) $100 a year. It comes out pretty sweet. I can set up a corp online in Nevada for $200.
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  • Profile picture of the author Negotiator74
    I have an S Corp. The one thing to keep in mind though is that you are going to need to incur the additional cost of a payroll company as you need to take a salary with an S Corp. My payroll company runs it monthly and I think they charge me $45.00 or so. Just another variable to think about as you make your decision.
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    • Profile picture of the author Adam Nolan
      Sole Proprietor... Corp in the next year w/ a board of directors.
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  • Profile picture of the author kindsvater
    It is rare that I see an LLC being a better option than a corp. But definitely get the opinion of a local CPA.
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  • Profile picture of the author MichaelHiles
    An LLC, an irrevocable trust, and an irrevocable charitable remainder trust that jointly own a C Corp with a Subchapter S designation.
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    • Profile picture of the author Jeffrey Arthur
      Originally Posted by MichaelHiles View Post

      An LLC, an irrevocable trust, and an irrevocable charitable remainder trust that jointly own a C Corp with a Subchapter S designation.
      Really like your business structure Michael, similar to mine except i live in Canada and luckily dont have all those different Corp. classifications like you guys down in the US do. So many types, must get confusing.

      Ive got a CCPC(private corp.) with 2 subsidiaries and a holding company attached, and then a plain CCPC. With this structure ive been able to avoid paying $ 0 tax for the past couple years.

      Im also thinking about starting an offshore corp. this year to test out, does anyone have any experience with this???
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      • Profile picture of the author MichaelHiles
        Originally Posted by Jeffrey Arthur View Post

        Really like your business structure Michael, similar to mine except i live in Canada and luckily dont have all those different Corp. classifications like you guys down in the US do. So many types, must get confusing.

        Ive got a CCPC(private corp.) with 2 subsidiaries and a holding company attached, and then a plain CCPC. With this structure ive been able to avoid paying $ 0 tax for the past couple years.

        Im also thinking about starting an offshore corp. this year to test out, does anyone have any experience with this???
        At this point, the taxes I'm most concerned with are the ones my kids will get hammered with when the valkyries take me on to Valhalla.

        Maximizing new, net revenue is always a concern, but it fluctuates. The spectre I see on the horizon is the progressive intolerance in the US to the concept of "high net worth" by the proletariat. And one of the big areas they will mount raiding parties will be on estate transfers... you know, to get rid of the bourgeoise aristocracy.

        Yes, I have some offshore for safekeeping. My securities attorney specializes in offshore insurance trusts for high net worth individuals ($5 million minimum), and takes people to his place in the Caymans to sign paperwork, etc...
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  • Profile picture of the author statquo2010
    I was thinking about an llc but will have to look at corp from the replies in the thread. That may be a better option.

    Eric
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  • Profile picture of the author Ben Roy
    As someone else mentioned, the best of both worlds seems to be an LLC that has filed to be taxed as an S Corp. You get all the benefits of an LLC (very light on paperwork, lower risk of being ruled a sole proprietor despite having filed everything (this CAN happen in court), but all the tax benefits of being an S corp. If your tax advisor is not aware of this possibility, you need to fire them and find someone better.
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  • Profile picture of the author Mo Goulet
    Nevada no state tax, you need only list the president secy/treas and the resident agent and it can all be one person. Print out the form from online and fax in the forms with a note where you want the paper work mailed to list your CC and your done.

    Need a mail drop, go see Eric at 848 N rainbow and tell him Mo in Idaho sent you $100 a year then get a skype las Vegas #...you be cool
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  • Profile picture of the author eQuus
    I was positive an LLC is the way to go for me. Now I'm all confused again.
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  • Profile picture of the author johnpetrov
    how come no one has mentioned about using an offshore company?
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    • Profile picture of the author TheWealthSquad
      It really depends on where you are and what you are looking for. Business structure is driven by state regulations. They determine your requirements for minutes, etc. For example in SC an S-Corp is easier to set up than an LLC.

      An LLC can chose to be taxed as an S-Corp if they elect to. You have to file the election within a specific time frame though. On an LLC all income flows through to your personal tax return. If you are a single person LLC you still file on a Schedule C so it doesn't make life any more complicated. All profit from an LLC has to pay Self employment tax on it. The benefit for being taxed like an S-Corp is that you pay yourself a reasonable salary (this is where most people get in trouble) and the rest of the profit can flow through without paying SE tax on it. A savings of over 15%!! There are a few quirks such as how health insurance is treated (better to be C-Corp than S-Corp for health insurance) but in the majority of cases a profitable business is better off as a S-Corp. It will require you to file an 1120S for your business though. It issues a K-1 that files on your personal return.

      C-Corps have better fringe benefit treatments than any of the other types. Health insurance, retirement packages, etc are typically better treated from a tax standpoint in a C-Corp than others. You do have to pay a salary and run the risk of paying double taxes on profits. Your company pays taxes and then issues dividends on the profit. You then pay taxes on your dividends. You can always pay yourself a large bonus at the end if you are the only share holder.

      Filing as a Nevada state corp does not eliminate your requirement to file a state tax return in your home state. You also have to file a foreign company doing business form in your home state. It really makes life complicated to do it that way. They do provide some benefits in terms of privacy but I think it is overrated. You can use them to be an Amazon affiliate if you live in a state like NC where you cannot be one. But you still have to pay taxes in NC on the income.

      There is no single right answer. Each one can be the right answer depending on where you are in your business life and how profitable you are.
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  • Profile picture of the author tjdaz
    I have a LLC.
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  • Profile picture of the author dondada1
    I have an LLC in nevada
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  • Profile picture of the author mentorondemand
    S Corp and an LLC from Nevada, however found that LLC from Nevada causes red flags for regulators if less than 3 years and it is hard to establish business credit.
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  • Profile picture of the author seobro
    I have a Subchapter S corporation and it has save me money. Please learn all the pros and cons. Each is better in certain ways.
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  • Profile picture of the author Cash37
    Had a S Corp but am in the process of dissolving it because the fees of doing business in my state are too high. Im going to reform as LLC taxes as S-Corp out of Deleware
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    • Profile picture of the author rickstooker
      LLC - from my research, single member LLC and S corp are both invisible to the IRS. You pay taxes at your individual rates, so I don't know what your CPA is referring to.

      C corp can be better for some people, especially those high income folks with
      marginal tax rates higher than the US 35% top corporate rate. There are numerous other benefits, but also numerous headaches. You must pay yourself a salary and be careful it's not too high or too low.
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      • Profile picture of the author Chris Grable
        Originally Posted by rickstooker View Post

        You pay taxes at your individual rates, so I don't know what your CPA is referring to.
        You are thinking about Income Tax.... See TheWealthSquad's post above.... you save on self employment tax.
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  • Profile picture of the author Sarah Russell
    Still a sole proprietor... Don't laugh at me - it's on the "to do/to change" list this year!
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  • Profile picture of the author gllewis
    Hello-- Does anybody know about a company in Nevada called fsm nevada llc? Was looking to do an LLC, just wondering if anyone has done business with them before?

    Thanks
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  • Profile picture of the author Bellthorpe
    A proprietary limited company.
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  • Profile picture of the author mrmagos
    As others have said, it all depends on which state you're in and your tax liability. I think LLCs are great for people just starting out - filing requirements are much simpler than the other options, they give you some (financial) protection, and you can always re-form down the road if your tax liability changes. For simplicity's sake, forming in the state in which you live is simplest - though talking with a CPA or tax lawyer is always advised before you form you company.
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  • Profile picture of the author humbledmarket
    Banned
    Very interesting conversation. I guess it really varies between individual needs and level you're at.
    Here's a great video I found while searching this up. Might help summarize the differences however I'm guessing most of those points are already listed
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  • Profile picture of the author SageSound
    A better question than "WHAT do you have?" is "WHY do you have it?"

    Too many people just set up one or another because that's what a friend did, or that's what the other guys on the forum seem to prefer, or whatever.

    It DEPENDS on YOUR SPECIFIC SITUATION which one is best for YOU!

    You need to talk to a tax professional and/or an attorney that specializes in that stuff.

    The reasons Sue set up an S-Corp, Larry set up an LLC, and Craig set up a C-Corp can be many and varied. And NONE of their specifics might apply to YOU!

    You might THINK you're saving money setting up an LLC just because it appears cheaper, but if it's just you as the only Member, you're going to pay 15% more self-employment taxes right out of the chute than if you have an S-Corp.

    But if you have assets to protect, or business partners, or you can get a friend or relative involved, that changes things.

    Talk to someone who knows their way around these things. Don't try it on your own.

    (Not legal advice, just experience talking!)

    Also, note that Nevada has additional fees for "foreign entities", which anybody not physically not situated within the State of Nevada. Getting a "local address" will probably cost you more than the extra fees. Nevada is hurting financially just like every other state, and one thing they're looking at BIG TIME is raising those fees on out-of-state business entities. Again, you need to look at your specific situation and determine if the risks are worth paying the additional fees. If not, it probably doesn't make sense to go with a Nevada entity just because it's "Nevada".
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