Question:

I am retiring next month. I have been asked to do some consulting for my old firm and others. A friend has suggested I form a limited liability company or an S corporation. While I don’t expect there to be any liability issues in my line of work, I’m wondering about the tax advantages of either entity? —Bill McIver, Cumming, Ga.

Answer:

There generally aren’t any tax advantages to forming a single-member limited liability company, or LLC, versus an S corporation, says John Evans, a tax partner who specializes in small businesses at BDO Seidman in New York. They’re both considered income pass-through entities, which means that income or losses from the business gets reported on your individual return. So, if an LLC or an S corporation earned $100, the company’s owner would report the full $100 on his or her individual return — creating a tax liability at the individual level.

However, operating as an LLC may be easier, says Evans. “Operating a corporation requires more formalities,” he says. Among other things, an S corporation’s owners are required to file a separate return, Form 1120s, elect a board of directors and host an annual board meeting.