LLC or S-Corp Lawyer in Florida
LLC vs. S-Corp: Determining the Right Structure for your Business
Whether you are thinking of changing your business structure or just starting out, the first step is to determine the appropriate business formation type and structure—an S-Corp or LLC?
While both business formation types have many qualities in common, they also have unique differences. Make sure you understand the pros and cons of each before determining which one is right for you.
LLC vs. S-Corp: What Are the Similarities?
- Both are separate legal entities via a state filing
- Owners are typically not held personally responsible for business liabilities and deaths as a result of limited liability protection
- Pass-through taxes means that the business does not pay taxes
- Profits or loss are reported through to the owner’s individuals tax returns and necessary taxes are paid and reported at the individual level
- LLCs only file business tax returns if the LLC has an additional owner
LLC vs. S-Corp: What Are the Differences?
The IRS has strict requirements regarding ownership of an S corporation. However, this is not true of LLCs.
Some examples of IRS restrictions include:
- Non-U.S. citizens may be members of LLCs, but an S-Corp can not have a non-U.S. citizen or resident as a shareholder
- LLCs are allowed to use subsidiaries without any restriction
- LLCs can have unlimited members, while an S Corp can have no more than 100 shareholders
- S corporations are prohibited from being owned by LLCs, partnerships, many trusts, C corporations or other S corporations; but this is not true for LLCs.
Some Commonly Asked Questions
Business Formation Formalities
Some of the most common formalities associated with an S corporation include:
- Creating and adopting bylaws
- Issuing shares of stock
- Holding director/shareholder meetings on an annual basis
- Keeping corporate records with minutes
These details may help point you in the right direction of what you need to do to start your business.
For LLCs, some of the common formalities include:
- Using an operative agreement
- Documenting annual member meetings
- Issuing membership shares
- Keeping track of all major company decisions
In addition to these differences, there are also distinctions with regard to management. S corps have officers and directors and the board of directors will oversee the major decisions in corporate affairs.
An LLC can have members or managers that take control of the LLC. When members actually manage the LLC, it is very similar to a partnership. If the LLC is operated by managers, it looks more like a corporation because members are not as involved in daily business decisions.
As you can see, how you set up your business can influence your company’s future in big ways, so you need to feel confident about your decision. Consult with an experienced West Palm Beach business formation attorney to learn more about your options and ensure that you have carefully considered all relevant factors.
Questions? Call a West Palm Beach LLC or S-Corp Lawyer
If you still have questions about whether you should set up your company as an S-Corp or an LLC, you need a consultation with a specialized attorney who deals with business matters.
Your business requires an LLC or S-Corp lawyer who can advise you about the issues you should consider in this process, and can help you to answer difficult questions makes the process easier.
Don’t let the frustration of trying to put together a business derail your success. Contact the Law Office of Todd M. Kurland and speak with an LLC or S-Corp lawyer today. I can help you accomplish your goals by walking you through each and every one of your questions and concerns.