S-Corp vs C-Corp or LLC

machine

LawnSite Member
Location
OH
Making the right choice in how your business in organized is a curical decison. I would love to debate the advantages and disadvantages to get a better understanding how we all opperate. I was preached to about forming a S-Corp years ago by the lawncare industry, but went the other way as a C-Corp. Yes, there is more paper work, but thats about the only disadvantage. I could list many more disadvantages to being a S-Corp. <p>Here some Topic's to get you guys FIRED UP:<p>Why be restricted on the class and how many share you can issue? Why be restricted period?<p>Double taxation is more of an advantage than what people think. <p> Also the prestige of being a C-Corp is uncomparable in the ease of Captial Markets and Marketablity toward shareholders, institutonial bankers, suppliers and about everyone. <p>I would also like to know Why you choose to be that certain entity.
 

Prime Seasons

LawnSite Member
Location
Whitehall, MI
S corp for my setup.<p>Why? Because my CPA and laywer both say so. My basis is primarily to minimize taxation and to shell/insulate my person from the business. Some may elect LLC or even S corp, but be careful as you can go from s to c easily but not the other way around.<p>Is S corp best for everyone? Not on your life. Hire an accountant you trust and pay for his service if you don't know how best to run your business-- that is their specialty!<p>Hope this is helpful...<p>gus
 
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M

machine

LawnSite Member
Location
OH
Numbers may be rough but talk about minizing taxation. Your GAAP Account & lawyer want the least amount of work to do. <br> Say Company has 100,000 gross profit. You take and Salary of 30,000, dedutable to only the C and a Pension of $25,000(Dividends not included in this example). Know Taxable income to the C is less than 50,000 at 15% Corporate tax bracket and your personal income is also $30,000 less Std detuction and extemptions to put you in tax bracket of 15%. (Filing single) Thats average tax of 30%(actually lower) <br>Where as an S dedution for Simple Plan or Keogh and all other dedutions and exptemtions still puts you in a 31% Tax braket. That 1% can add up to alot of money, plus the more money the Corp makes the wider that percent gap becomes. There are much more dedutable expenses a C can declare wear a S cannot, reducing the TI even futher and increase the gap on Avg. TAX paid to IRS.<br>
 
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bill phagan

Guest
various corporations are designed for various businesses based on a number of variables......income, etc...suggest you get direction from a CPA/Tax Atty. It will pay off.
 
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