Do You Need an LLC or a Corporation?
You could be a sole proprietor, partnership, llc, corporation, or s corp.
But how do you know which one is right for you?
Here's how to tell...
1. How many owners are there?
If you have one owner, you can be a Sole Proprietor, LLC, Corporation, or S Corporation.
If you have two or more owners, you can be a Partnership, LLC, Corporation or S Corporation.
2. Do you sell products or services?
If you're selling products, it's especially important to have the limited liability protections of a formal company, like an LLC or Corporation.
If you're selling a service, it may be a good idea to have limited liability protection, but you may also be safe with an insurance policy that covers your risk.
3. What kind of tax treatment do you want?
Some companies have similar tax structures that are easy to compute and file, while others are more complicated.
A Sole Proprietor or LLC is simpler for taxes.
A Corporation is more complex and subject to double tax.
An S Corporation is usually the best tax option.
4. Can you handle a formal management style, like a board of directors and record keeping requirements?
Consider whether you want something easy or whether you can handle annual filings, fees, and record keeping.
An LLC is simple, while a Corporation has a lot of requirements.
5. Are you interested in investors?
There are certain company types that investor will require. So if you want to attract them, you’ll need to file correctly.
A Corporation is usually the best fit when you’re looking for investors.
So how do you pick?
There's no right or wrong company choice. It's about which one is the best fit for your company goals.
Think about which factors above are most important to you.
You’ll learn when you need a DBA.
You’ll learn how to file an LLC step by step.
You’ll learn about business licenses, sales taxes, and s corps.
Plus it's affordable ($19) and it's everything you need to start your business legally.