Saturday November 21, 2009

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Advantages of an LLC vs. S-Corp
A friend has suggested I form a limited liability company or an S corporation for my consulting work. I’m wondering about the tax advantages of either entity?
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Rich, Business Advisor, SCORE Montco, PA Posted: 8:28 AM On July 7, 2009
Bill- If you need additional advice SCORE, a resource partner of US SBA extends FREE counseling to all. Go to www.score.org or my chapter www.score513.org for additional information and mentoring.
Rich, Business Advisor/Counselor, SCORE Montgomery Posted: 8:18 AM On July 7, 2009
Mr Evans is correct,the only basic tax advantage(check with CPA for your circumstances)of S over LLC is that you can distribute & apportion income as salary & shareholder dividends. Dividends portion is not subject to FICA with S vs. LLC which all profit is subject to self-employment tax.

Other differences terms of eligibility of S is that all shareholders must be individuals and US citizens vs. LLC where members can be another entity or non-US citizen.

Both entities have the corp veil protection - contrary to Mr. Fallis' statement. Actually, since a LLC is a relatively new entity structure, rules and regs vary by state vs. a S which is standard.

As far as income being deferred, if your client has pre-paid for services not yet performed that income can be deferred regardless of structure. A 'C' corporation has retained earnings.
Rich Fallis Posted: 2:53 PM On May 29, 2009
Geez...I hope this guy's advice is a little more detailed to his clients.

An LLC...means if you screw up, you don't lose your house or your cars or your bank-account if you are sued (if you kept your corporate veil intact).

Second, with an LLC, you can defer income. So, you don't have to pay tax on every dime you made in a specific year, but can forward your taxes to another year...at which time you can pay yourself or spend profits on whatever you need to grow your business.

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