What business entity is best?
Im planning on starting a house cleaning business sometime soon but im trying to decide between LLC or a "C". Its going to start from scratch. As of right presently I have 35 customers who allready replied to posters and business cards...I also am working on hiring atleast 4 girls to start with. As for the adjectives my goal is to have atleast 300 customers..own/rent valid estate. and offer benifits.
Now I know that with C corp you obverse the double taxation by paying on company profits and then on profits passed to the owner..as compared to LLC the owner pays the total profits as income.
That is what I read and heard.anyone have a better understanding of this?
Thanks :)
Answers: I would recommend an LLC, it is generally smaller amount regulated then a C or S corp and has the advantages of miss through of the S corp.
Sean, the first responder has incorrect information about the C-corp contained by his response...Liability exposure is only an issue if you were considered a sole proprietorship or standard partnership.
MOST IMPORTANT is that you shouldn't take advice on this most impressive matter from anonymous people on Yahoo. Talk to your accountant, you may enjoy tax issues or local laws that we aren't aware of that would influence your result. Seek professional assistance.
Look into an S corp.
We have one. The same protections as a C Corp but not the double taxation. The profits are "passed on" to the shareholders and are taxed at the shareholders due rate.
Another advantage over a sole Proprietor is the elimination of the self employed charge or higher medicare/social security.
You merely pay solcial security/medicare on wages, not profits passed on. This way you gather 15.3% in taxes on the profits.
Go legally Off-shore and structure it so you minimize your taxes to in close proximity zero. Period.
But most of all, stay away from anything to be precise recommended by a government employees or any establishment body in general. They, anyone the unproductive group of our society only want your money. They have no other interests.
Or would you help yourself to a business advice from the same general public who run the Post Office? Now, really! When you really think about it, it's a business nightmare isn't it?!
Based on your facts, I would step with the LLC. It allows you to take money out and put money surrounded by the the business with less restriction. It's also easier as far as tariff return preparation. Well, when it comes to a C corp I believe, you, as the owner, are fully liable for your company since you will be, I'm assuming, the only investor. If you went beside an "S" corp, however, your personal assets will not be in jeopardy if someone decides to hold you to court. Also, I don't think "S" corps are faced near double taxation. Your personal assets are also covered with an LLC hence Limited Liability Company.
The biggest advantage to a "C" or "S" corp is that you can vend shares to investors if you're needing the boost to your assets.
So I would go beside either an LLC or "S" Corp.
The following is an article written by Karen Lange, The Company Corporation(R). I hope the information helps you.
Understanding Business Structures
By Karen Lange, The Company Corporation(R)
Business owners may choose from a mixture of company structures, based on their needs and preferences. Especially next to the advent of the Limited Liability Company (LLC), the choices for small business are wider and better than ever before. More good word for small business—as the needs of the company changes, the existing business structure can be amended or a investigational business structure can be formed quickly, easily and affordability. Below are adjectives descriptions of the most popular business structures to help you get started.
General Corporation
A standard corporation, also known as a "C" corporation, is the most common corporate structure. A standard corporation may have an unlimited number of stockholders. Consequently, it is usually chosen by those companies planning to have more than 30 stockholders or immense public stock offerings. Since a corporation is a separate legal entity, a stockholder's personal liability is usually limited to the amount of investment within the corporation and no more.
Close Corporation
A close corporation is most appropriate for the individual starting a company alone or with a small number of population. There are a few significant differences between a general corporation and a close corporation. A close corporation limits stockholders to a maximum of 30. In combination, many close corporation statutes require that the directors of a close corporation must first offer the shares to existing stockholders past selling to new stockholders. Not all states certificate close corporations.
Subchapter S Corporation
A Subchapter S Corporation is a general corporation that has elected a special rates status with the IRS after the corporation has be formed. Subchapter S corporations are most appropriate for small business owners and entrepreneurs who prefer to be taxed as if they were still sole proprietors or partner. When a general corporation makes a profit, it pays a federal corporate income excise on the profit. If the company also declares a dividend, the stockholders must report the dividend as personal income and pay more taxes. S Corporations avoid this "double taxation" (once at the corporate plane and again at the personal level) because all income or loss is reported only once on the personal charge returns of the stockholders. For many small businesses, the S Corporation offers the best of both worlds, combining the tariff advantages of a sole proprietorship or partnership with the limited liability and undying life of a corporate structure.
Limited Liability Company (LLC)
The LLC is not a corporation, but it offers lots of the same advantages. Many small business owners and entrepreneurs prefer LLC's because they combine the limited liability protection of a corporation next to the "pass through"" taxation of a sole proprietorship or partnership. LLC's have second advantages over corporations:
LLC's allow greater flexibility in management and business establishment.
LLC's do not have the ownership restrictions of S Corporations, making them ideal business structures for foreign investors.
LLC's accomplish these aims short the IRS' restrictions of an S Corporation.
LLC's are now available in adjectives 50 states and Washington, D.C. Guidelines for corporations and LLCs are set by each individual state, and vary by state.
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Now I know that with C corp you obverse the double taxation by paying on company profits and then on profits passed to the owner..as compared to LLC the owner pays the total profits as income.
That is what I read and heard.anyone have a better understanding of this?
Thanks :)
Answers: I would recommend an LLC, it is generally smaller amount regulated then a C or S corp and has the advantages of miss through of the S corp.
Sean, the first responder has incorrect information about the C-corp contained by his response...Liability exposure is only an issue if you were considered a sole proprietorship or standard partnership.
MOST IMPORTANT is that you shouldn't take advice on this most impressive matter from anonymous people on Yahoo. Talk to your accountant, you may enjoy tax issues or local laws that we aren't aware of that would influence your result. Seek professional assistance.
Look into an S corp.
We have one. The same protections as a C Corp but not the double taxation. The profits are "passed on" to the shareholders and are taxed at the shareholders due rate.
Another advantage over a sole Proprietor is the elimination of the self employed charge or higher medicare/social security.
You merely pay solcial security/medicare on wages, not profits passed on. This way you gather 15.3% in taxes on the profits.
Go legally Off-shore and structure it so you minimize your taxes to in close proximity zero. Period.
But most of all, stay away from anything to be precise recommended by a government employees or any establishment body in general. They, anyone the unproductive group of our society only want your money. They have no other interests.
Or would you help yourself to a business advice from the same general public who run the Post Office? Now, really! When you really think about it, it's a business nightmare isn't it?!
Based on your facts, I would step with the LLC. It allows you to take money out and put money surrounded by the the business with less restriction. It's also easier as far as tariff return preparation. Well, when it comes to a C corp I believe, you, as the owner, are fully liable for your company since you will be, I'm assuming, the only investor. If you went beside an "S" corp, however, your personal assets will not be in jeopardy if someone decides to hold you to court. Also, I don't think "S" corps are faced near double taxation. Your personal assets are also covered with an LLC hence Limited Liability Company.
The biggest advantage to a "C" or "S" corp is that you can vend shares to investors if you're needing the boost to your assets.
So I would go beside either an LLC or "S" Corp.
The following is an article written by Karen Lange, The Company Corporation(R). I hope the information helps you.
Understanding Business Structures
By Karen Lange, The Company Corporation(R)
Business owners may choose from a mixture of company structures, based on their needs and preferences. Especially next to the advent of the Limited Liability Company (LLC), the choices for small business are wider and better than ever before. More good word for small business—as the needs of the company changes, the existing business structure can be amended or a investigational business structure can be formed quickly, easily and affordability. Below are adjectives descriptions of the most popular business structures to help you get started.
General Corporation
A standard corporation, also known as a "C" corporation, is the most common corporate structure. A standard corporation may have an unlimited number of stockholders. Consequently, it is usually chosen by those companies planning to have more than 30 stockholders or immense public stock offerings. Since a corporation is a separate legal entity, a stockholder's personal liability is usually limited to the amount of investment within the corporation and no more.
Close Corporation
A close corporation is most appropriate for the individual starting a company alone or with a small number of population. There are a few significant differences between a general corporation and a close corporation. A close corporation limits stockholders to a maximum of 30. In combination, many close corporation statutes require that the directors of a close corporation must first offer the shares to existing stockholders past selling to new stockholders. Not all states certificate close corporations.
Subchapter S Corporation
A Subchapter S Corporation is a general corporation that has elected a special rates status with the IRS after the corporation has be formed. Subchapter S corporations are most appropriate for small business owners and entrepreneurs who prefer to be taxed as if they were still sole proprietors or partner. When a general corporation makes a profit, it pays a federal corporate income excise on the profit. If the company also declares a dividend, the stockholders must report the dividend as personal income and pay more taxes. S Corporations avoid this "double taxation" (once at the corporate plane and again at the personal level) because all income or loss is reported only once on the personal charge returns of the stockholders. For many small businesses, the S Corporation offers the best of both worlds, combining the tariff advantages of a sole proprietorship or partnership with the limited liability and undying life of a corporate structure.
Limited Liability Company (LLC)
The LLC is not a corporation, but it offers lots of the same advantages. Many small business owners and entrepreneurs prefer LLC's because they combine the limited liability protection of a corporation next to the "pass through"" taxation of a sole proprietorship or partnership. LLC's have second advantages over corporations:
LLC's allow greater flexibility in management and business establishment.
LLC's do not have the ownership restrictions of S Corporations, making them ideal business structures for foreign investors.
LLC's accomplish these aims short the IRS' restrictions of an S Corporation.
LLC's are now available in adjectives 50 states and Washington, D.C. Guidelines for corporations and LLCs are set by each individual state, and vary by state.